<PAGE>
Goldman Sachs Trust
FINANCIAL SQUARE FUNDS
. Prime Obligations Fund
. Money Market Fund
. Premium Money Market Fund
. Treasury Obligations Fund
. Treasury Instruments fund
. Government Fund
. Federal Fund
. Tax-Free Money Market Fund
Goldman
Sachs
ANNUAL REPORT
December 31, 1997
<PAGE>
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LETTER TO SHAREHOLDERS
- -------------------------------- --------------------------------
DEAR SHAREHOLDERS:
We welcome this opportunity to provide you with a summary of the trends and
key events that affected the economy and the Goldman Sachs Financial Square
Funds in 1997. It was another strong year for the funds, as all of them--with
the exception of three new Financial Square Funds, which do not yet possess 12-
month performance return information (see new fund information below)--
outperformed their respective IBC Financial Data, Inc. averages. Assets in the
Financial Square Funds totaled $19.3 billion as of December 31, 1997.
THREE NEW FINANCIAL SQUARE FUNDS AVAILABLE
We are pleased to inform you that three new Financial Square Funds became
available during the fiscal year. Each fund's objective is to maximize current
income to the extent consistent with the preservation of capital and the
maintenance of liquidity by investing exclusively in high-quality money market
instruments.
.FINANCIAL SQUARE FEDERAL FUND
Investment Strategy: In seeking to achieve its objective, the fund invests in
U.S. Government securities and U.S. Treasury securities. The fund does not
invest in repurchase agreements.
AAAm Rating: The fund is rated AAAm by Standard & Poor's Ratings Group, and
appears on the National Association of Insurance Commissioners Approved List
of Class I Money Market Funds.
.FINANCIAL SQUARE TREASURY INSTRUMENTS FUND
Investment Strategy: In seeking to achieve its objective, the fund invests in
securities issued or guaranteed by the U.S. Treasury, which are backed by the
full faith and credit of the U.S. Government, the interest from which is
typically exempt from most state income taxes. The fund does not invest in
repurchase agreements.
AAAm Rating: The fund is rated AAAm by Standard & Poor's Ratings Group, and
Aaa by Moody's Investor Services, Inc., and appears on the National
Association of Insurance Commissioners Approved List of Exempt Money Market
Funds.
.FINANCIAL SQUARE PREMIUM MONEY MARKET FUND
Investment Strategy: In seeking to achieve its objective, the fund intends to
invest only in securities that are rated in the highest category for short-
term debt obligations by the requisite number of nationally recognized
statistical rating organizations. The fund can also invest in securities
which are unrated, but only if they are deemed to be of comparable quality by
the fund's Trustees.
AAAm Rating: The fund is rated AAAm by Standard & Poor's Ratings Group and
Aaa by Moody's Investors Services, Inc., and appears on the National
Association of Insurance Commissioners Approved List of Class I Money Market
Funds.
1997 IN REVIEW
Over the first quarter, the U.S. economy demonstrated significant strength,
with no sign of slowing. Employment data pointed to continued growth as
unemployment rates dropped, average hourly earnings rose and real consumer
spending surged. In March, in a show of concern over the pace of economic
growth, the Federal Reserve Board chose to raise short-term rates by 25 basis
points. When all was said and done, first quarter's real gross domestic product
(GDP) posted a robust 4.9% increase--although this was attributed to an
increase in inventories, typically a precursor of slower growth.
Economic data early in the second quarter, including New Home Sales, the
Employment Cost Index (ECI), GDP and durable goods, continued to point to
ongoing momentum in the economy. By June, there was no overwhelming evidence
that the economy had slowed to a sustainable growth pace. Nevertheless, Fed
officials seemed impressed with a slowdown in the pace of broad price measures,
and opted to maintain a neutral stance. Early third-quarter data initially
suggested that any slowdown perceived by the Fed represented a modified
correction from the first quarter's rapid growth, not the
--------------------------------
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1
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LETTER TO SHAREHOLDERS (continued)
- --------------------------------------- ---------------------------------------
onset of a weaker trend. However, as the quarter progressed, subdued
inflationary pressures and a slower pace of economic growth further lowered the
probability that Fed officials would tighten monetary policy in the months that
remained in 1997.
In the final months of the fiscal year, financial turmoil in Asia's equity
markets spilled into the U.S. However, a number of factors, including Federal
Reserve Chairman Alan Greenspan's testimony and U.S. investors' overall
reaction to the market, quickly restored confidence that the U.S. market would
not suffer a significant downturn. Not surprisingly, at its November meeting,
the Fed chose to leave monetary policy on hold. As the fourth quarter drew to a
close, central bankers continued to be torn between their anxiety over
excessively rapid demand growth and rising wages on the domestic front and
their worries that the Asian crisis could spread to new regions and have a
negative impact on U.S. output and earnings prospects. Consequently, Fed
officials chose to maintain their "wait-and-see" stance on monetary policy and
await future market developments.
HISTORICAL YIELD CURVE (LIBOR)
<TABLE>
<CAPTION>
1996 1997
------ ------
<S> <C> <C>
1 month 5.50 5.72
3 months 5.56 5.81
6 months 5.60 5.84
9 months 5.69 5.91
12 months 5.79 5.97
</TABLE>
The Federal funds rate began the year at 5.25% and ended the year at 5.50%. The
slope of the LIBOR yield curve steepened significantly over the course of the
year. By the end of 1997, the spread between one- and 12-month LIBOR moved to
plus 25 basis points.
Source: Goldman Sachs Fixed Income Database, reflecting London Interbank
Offered Rate (LIBOR).
SUMMARY FOR FINANCIAL SQUARE FUNDS INSTITUTIONAL SHARES* AS OF 12/31/97
<TABLE>
<CAPTION>
SEC SEC
7-DAY 7-DAY 30-DAY WEIGHTED AVG.
FINANCIAL SQUARE CURRENT EFFECTIVE AVERAGE MATURITY
FUNDS YIELD YIELD YIELD (DAYS)
---------------- ------- --------- ------- -------------
<S> <C> <C> <C> <C>
Prime
Obligations.... 5.64% 5.80% 5.61% 44
Money Market.... 5.65 5.81 5.62 38
Premium Money
Market......... 5.69 5.85 5.62 35
Treasury
Obligations.... 5.57 5.72 5.50 36
Treasury
Instruments.... 5.10 5.23 5.12 39
Government...... 5.62 5.78 5.55 42
Federal......... 5.54 5.69 5.50 35
Tax-Free Money
Market......... 3.88 3.95 3.58 47
</TABLE>
*Financial Square Funds offer four separate classes of shares (Institutional,
Preferred, Administration and Service), each of which is subject to different
fees and expenses that affect performance and entitle shareholders to different
services. The Preferred, Administration and Service shares offer financial
institutions the opportunity to receive a fee for providing administrative
support services. The Preferred shares pay 0.10%, Administration shares pay
0.25%, and the Service shares pay 0.50%. Performance reflects fee waivers and
expense reimbursements. Had fees not been waived or expenses reimbursed
performance would be reduced. Past performance is no guarantee of future
results. Yields will vary. An investment in any one of the Financial Square
Funds is neither insured nor guaranteed by the U.S. Government nor is there any
assurance that the Funds will be able to maintain a stable net asset value of
$1.00 per share. More complete information, including management fees and
expenses, is included in the funds' prospectus or may be obtained by calling
Goldman Sachs Funds at 1-800-621-2550.
STRATEGY
Taxable. The funds began the fiscal period with a short laddered structure
intended to be advantageous in the event of a steepening yield curve. In March,
the Fed's decision to tighten led us to extend the funds' weighted average
maturities. Despite a market rally over the next several months, we maintained
these longer weighted average maturities due to a benign inflationary
environment and a "wait-and-see" Fed. In the second
---------------------------------------
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2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------- ---------------------------------------
half of the fiscal year, a period of Fed inactivity caused us to slightly
extend the funds' durations to the upper end of the neutral range in seeking to
capture incremental yield. We maintained this stance throughout November and
December.
Tax-Exempt. Early in the year, the tax-exempt money market funds assumed
defensive weighted average maturities, as we anticipated higher short-term
rates in the near future. As expected, this scenario played itself out in March
when the Fed tightened, and was magnified in April when larger than expected
tax payments caused the market to back up further. During the second half of
the year, we began to extend the weighted average maturities of the funds as
the likelihood of further Fed tightening faded.
DOMESTIC CREDIT TRENDS POSITIVE
Domestic credit quality in 1997 continued its positive trend. It was the
third consecutive year of extraordinary stock market growth and record mergers
and acquisitions. It was the seventh straight year of growth for the U.S.
economy, with high employment, low inflation and relatively stable, low
interest rates. U.S. corporations and financial institutions reported strong
earnings as a result of the strong economic environment as well as from
previous cost-cutting and consolidation moves.
The improvement in credit strength was broad-based, except in the consumer
credit sector, which continued its downward trend. Consumer bankruptcy filings
set another record high of 1.3 million cases in 1997. Credit card loan
delinquencies, however, began to stabilize by the end of the year. These
consumer credit problems had a negative impact on the financial sector,
including serious problems in the sub-prime auto lending industry. The Credit
Department's experienced team of financial institutions analysts closely
monitored consumer credit quality trends.
THE CREDIT PICTURE ABROAD: ASIA IN TROUBLE, EMU ON COURSE
The international credit environment in 1997 was dominated by the Asian
financial crisis and the apparent resolution of European Monetary Union's (EMU)
likely course. Thailand's forced currency devaluation in July set off a
financial fire that found ample fuel in the region's highly leveraged
economies. Even higher-rated securities were affected; for example, Hong Kong
weathered various shocks flowing from Southeast Asia. At the time this report
was written, there were no Asian-issued holdings in any of the Financial Square
money market funds.
In Europe, the second half of the year presented a more positive picture than
the first part of the year. A "euroland" of 11 countries now appears on track,
with almost every government producing better than expected fiscal results and
unexpectedly strong economies. Yields and asset prices have begun to achieve a
measure of convergence across the Continent, while the rating agencies have
begun to clarify their (differing) approaches to creditworthiness under the
euro. Just as important, political resistance to EMU has been effectively
controlled despite stubbornly high unemployment. The combination of Europe's
improving performance and the U.S.'s continuing robust health has helped to
mute the broader contagion effects from Asia so far, though such effects may
become more potent if Asia's trouble continues well into 1998.
The year ahead will likely be more difficult for the domestic economy, with
the uncertain outlook in Europe and Asia. The Goldman Sachs Credit Department,
with its analysts based in London, Tokyo, Frankfurt and New York, as well as
extensive technological assets and credit expertise, will continue to
anticipate and monitor global developments and apply its conservative credit
standards to the money market funds.
OUTLOOK AND STRATEGIES FOR 1998
The pivotal factor in the U.S. economic outlook for 1998 is the tug of war
between the trade drag from Asia and the strength of the domestic economy. Asia
will most likely dominate the first half of the year while the tight U.S. labor
market is likely to have an impact in the second half of the year.
---------------------------------------
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3
<PAGE>
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LETTER TO SHAREHOLDERS (continued)
- --------------------------------------- ---------------------------------------
- --------------------------------------- ---------------------------------------
This view is dependent upon the behavior of the U.S. stock market, which has
boosted spending in both households and businesses in recent years. A decline
in the stock market could hurt consumer spending and keep the Fed on hold
throughout the year.
Providing there are no new disturbances relative to the Asian markets or
domestic financial asset prices, we anticipate that the Fed will hold off on
making policy changes for some time to come. With no signs of inflation and the
U.S. dollar ever stronger with respect to foreign markets, Chairman Greenspan
and the Fed have good reason to "wait and see" how events unfold overseas
before making any decisions that could prove destabilizing in the short term
and whose long-term impact would be uncertain.
With the Fed on hold for the near term, we expect to position the funds with
neutral weighted average maturities. However, a steepening yield curve would
give us the incentive to extend the weighted average maturities on all funds,
as any Fed tightening in 1998 is likely to be modest.
In closing, we thank you for your support and for making 1997 a year of
record assets for the Financial Square money market funds. As in the past, we
will continue to look for additional ways to improve our services, while
seeking to provide you with competitive performance. We welcome your
suggestions and questions, and look forward to another strong year in 1998.
Sincerely,
/s/ Kaysie Uniacke
Kaysie Uniacke
Portfolio Manager
February 2, 1998
4
<PAGE>
Statement of Investments
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FINANCIAL SQUARE PRIME OBLIGATIONS FUND
December 31, 1997
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER AND CORPORATE OBLIGATIONS--33.4%
BANK HOLDING COMPANIES
Bankers Trust Securities Corp.
$ 50,000,000 5.67% 06/09/98 $ 48,747,875
Corestates Bank, N.A.
30,000,000 5.93 01/02/98 30,000,000
BUSINESS CREDIT INSTITUTIONS
CIT Group Holdings, Inc.
100,000,000 5.63 04/29/98 98,154,611
General Electric Capital Corp.
50,000,000 5.60 01/28/98 49,790,000
40,000,000 5.69 02/12/98 39,734,467
50,000,000 5.69 02/17/98 49,628,569
COMMERCIAL BANKS
CP Trust Certificates Series 1996-1
85,000,000 6.22(a) 03/30/98 85,000,000
HOME BUILDERS
First Data Corp.
35,000,000 5.63 06/16/98 34,091,381
RECEIVABLE/ASSET FINANCINGS
Ciesco LP Series 4-2
25,000,000 5.55 01/23/98 24,913,681
Dakota Certificates of Standard Credit Card Master Trust
40,000,000 5.62 01/15/98 39,912,578
25,000,000 5.62 01/21/98 24,921,944
Enterprise Funding Corp.
44,917,000 5.64 01/16/98 44,811,445
20,598,000 5.61 01/21/98 20,533,803
50,000,000 5.72 01/22/98 49,832,583
17,099,000 5.63 01/30/98 17,021,451
35,610,000 5.71 04/28/98 34,949,167
11,776,000 5.68 05/28/98 11,502,875
Receivables Capital Corp.
50,000,000 5.60 01/14/98 49,898,889
14,643,000 5.61 01/15/98 14,611,054
44,047,000 5.69 02/11/98 43,761,563
WCP Funding Corp.
25,000,000 5.60 01/28/98 24,895,000
25,000,000 5.63 02/10/98 24,843,611
SECURITY AND COMMODITY BROKERS, DEALERS AND SERVICES
Bear Stearns Companies, Inc.
50,000,000 5.62 01/14/98 49,898,528
15,000,000 5.61 01/28/98 14,936,888
20,000,000 5.62 01/29/98 19,912,578
90,000,000 5.69 02/17/98 89,331,425
JP Morgan Securities, Inc.
50,000,000 5.98(a) 01/09/98 50,000,000
Merrill Lynch & Co., Inc.
45,000,000 5.94 01/02/98 44,998,290
45,000,000 5.96 01/02/98 44,998,322
45,000,000 5.97 08/14/98 45,000,000
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER AND CORPORATE OBLIGATIONS (CONTINUED)
SECURITY AND COMMODITY BROKERS, DEALERS AND SERVICES (CONTINUED)
Morgan Stanley Dean Witter, Inc.
$ 70,000,000 5.69% 02/23/98 $69,413,614
40,000,000 5.74 03/11/98 39,559,933
80,000,000 5.64 06/01/98 78,107,467
Smith Barney Holdings, Inc.
25,000,000 5.51 01/06/98 24,980,868
50,000,000 5.70 02/11/98 49,675,417
- ------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER AND CORPORATE OBLIGATIONS $1,482,369,877
- ------------------------------------------------------------------------------------------------
BANK NOTES--9.0%
BankBoston, N.A.
$ 20,000,000 5.75% 02/17/98 $ 20,000,000
50,000,000 5.99 08/13/98 50,000,000
25,000,000 5.97 10/21/98 25,000,000
Comerica Bank Detroit
50,000,000 6.00 03/27/98 49,981,112
35,000,000 6.18 05/27/98 34,992,657
FCC National Bank
60,000,000 6.01 07/06/98 59,991,241
First National Bank of Boston, N.A.
50,000,000 5.61 01/06/98 50,000,000
Huntington National Bank
50,000,000 5.82 11/13/98 49,983,429
Morgan Guaranty Trust Co.
60,000,000 6.02 03/25/98 59,987,237
- ------------------------------------------------------------------------------------------------
TOTAL BANK NOTES $ 399,935,676
- ------------------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES(A)--35.8%
American Express Centurion Bank
$ 25,000,000 5.97% 01/08/98 $ 25,000,000
25,000,000 5.95 01/13/98 25,000,000
25,000,000 5.93 01/20/98 25,000,000
32,000,000 5.94 01/20/98 32,000,000
Amsouth Bank of Alabama, N.A.
50,000,000 5.92 01/28/98 49,992,064
Bank One Columbus, N.A.
50,000,000 5.55 01/06/98 49,985,789
50,000,000 5.57 01/06/98 49,989,068
Bank One Texas
75,000,000 5.55 01/06/98 74,971,266
Comerica Bank Detroit
65,000,000 5.90 01/05/98 64,995,785
75,000,000 5.88 01/15/98 74,985,302
Commonwealth Life Insurance Co.(b)
55,000,000 5.86 09/04/98 55,000,000
</TABLE>
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
5
<PAGE>
Statement of Investments
- --------------------------------------------------------------------------------
FINANCIAL SQUARE PRIME OBLIGATIONS FUND (continued)
December 31, 1997
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VARIABLE RATE DEMAND NOTES (CONTINUED)
Corestates Bank, N.A.
$ 25,000,000 5.93% 01/02/98 $ 25,000,000
45,000,000 5.96 01/02/98 45,000,000
25,000,000 5.65 01/05/98 25,000,000
50,000,000 5.66 01/05/98 50,000,000
10,000,000 5.95 06/05/98 10,000,000
Corestates Capital Corp.
25,000,000 5.93 01/23/98 25,000,000
Dakota Certificates of Standard Credit Card Master Trust
40,000,000 5.69 02/11/98 39,740,789
10,000,000 5.70 02/19/98 9,922,417
33,000,000 5.73 03/10/98 32,642,830
FCC National Bank
40,000,000 5.74 01/02/98 39,982,295
90,000,000 6.16 01/02/98 89,984,959
First Bank FSB
50,000,000 5.86 01/21/98 49,987,048
First Bank, N.A.
65,000,000 5.86 01/21/98 64,987,398
25,000,000 5.87 01/21/98 24,994,940
Ford Motor Credit Corp.
30,000,000 6.30 03/02/98 30,056,644
Merrill Lynch & Co., Inc.
30,000,000 5.95 01/09/98 29,997,734
19,500,000 5.65 08/03/98 19,499,437
Nationsbank Corp.
25,000,000 5.89 01/02/98 25,000,000
New York Life Insurance
40,000,000 5.89 03/03/98 40,000,000
Pacific Mutual Life Insurance Co.
50,000,000 5.66 03/03/98 50,000,000
PNC Bank, N.A.
25,000,000 5.87 01/02/98 24,999,056
75,000,000 6.13 01/02/98 74,972,661
Seattle Washington Tax Series 1994
25,000,000 6.00 01/01/98 25,000,000
SMM Trust Series 1997-X
35,000,000 6.00 12/14/98 35,000,000
Southtrust Bank of Alabama, N.A.
115,000,000 5.91 01/02/98 114,988,979
45,000,000 5.90 09/08/98 44,984,854
Texas State Vet Series 1996 A
14,255,000 6.00 01/01/98 14,255,000
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TOTAL VARIABLE RATE DEMAND NOTES $1,587,916,315
- ------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CERTIFICATES OF DEPOSIT--6.6%
Bankers Trust Securities Corp.
$ 50,000,000 5.78% 06/18/98 $ 50,000,000
85,000,000 5.79 06/18/98 85,000,000
Crestar Bank
25,000,000 5.70 01/20/98 25,000,130
First National Bank of Boston, N.A.
30,000,000 5.81 04/22/98 30,000,209
Morgan Guaranty Trust Co.
45,000,000 5.91 03/19/98 44,996,370
Regions Bank
60,000,000 6.00 03/18/98 59,997,612
- ----------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT $ 294,994,321
- ----------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--15.9%
Joint Repurchase Agreement Account(c)
$404,500,000 6.40% 01/02/98 $ 404,500,000
Lehman Brothers, Inc., dated 12/31/97, repurchase price $300,100,833
(total collateral value $306,003,497 consisting of FHLMC: 6.00%-10.00%,
09/01/99-10/01/27; FNMA: 6.00%-9.50%, 03/01/99-12/01/27)
300,000,000 6.05 01/02/98 300,000,000
- ----------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS $ 704,500,000
- ----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $4,469,716,189(d)
</TABLE>
- --------------------------------------------------------------------------------
(a) Variable rate security-base index is either U.S. Treasury Bill, one or
three month LIBOR, one month commercial paper, Federal Funds, or Prime
lending rate.
(b) Portion of this security is when-issued.
(c) Portion of this security is being segregated for a when-issued security.
(d) The amount stated also represents aggregate cost for federal income tax
purposes.
Interest rates represent either the stated coupon rate, annualized yield on
date of purchase for discounted notes, or for floating rate securities, the
current reset rate, which is based upon current interest rate indices.
Maturity dates represent either the stated date on the security, the next
interest reset date for floating rate securities, or the prefunded date for
those types of securities.
The percentages shown for each investment category reflect the value of
investments in that category as a percentage of total net assets.
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
6
<PAGE>
Statement of Investments
- --------------------------------------------------------------------------------
FINANCIAL SQUARE MONEY MARKET FUND
December 31, 1997
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER AND CORPORATE OBLIGATIONS--30.5%
BUSINESS CREDIT INSTITUTIONS
General Electric Capital Corp.
$ 30,000,000 5.69% 02/12/98 $ 29,800,850
CHEMICAL COMPANY
Henkel Corp.
10,000,000 5.60 01/14/98 9,979,778
COMMERCIAL BANKS
CP Trust Certificates Series 1996-1
60,000,000 6.22(a) 03/30/98 60,000,000
CP Trust Certificates Series 1996-2
50,000,000 6.24(a) 12/28/98 50,000,000
ELECTRIC COMPANIES
Mitsubishi & Co. USA, Inc.
20,000,000 5.64 01/23/98 19,931,067
25,000,000 5.65 01/26/98 24,901,910
FOREIGN BANKS
Banca CRT Financial Corp.
2,000,000 5.65 01/20/98 1,994,036
13,030,000 5.65 01/23/98 12,985,010
5,500,000 5.65 01/26/98 5,478,420
32,000,000 5.65 01/27/98 31,869,422
Bayerische Vereinsbank AG, New York(b)
100,000,000 5.52 07/02/98 97,224,667
BCI Funding Corp.
25,000,000 5.57 01/14/98 24,949,715
Cades
50,000,000 5.63 05/29/98 48,842,722
45,000,000 5.68 06/10/98 43,864,000
Credit Suisse First Boston, New York
50,000,000 5.52 01/08/98 49,946,333
50,000,000 5.70 01/15/98 49,889,167
Nordbanken North America
70,000,000 5.52 01/12/98 69,881,933
Rose One Plus
26,489,000 5.72 02/10/98 26,320,648
50,000,000 5.72 02/12/98 49,666,333
71,038,000 5.73 02/27/98 70,393,508
20,000,000 5.75 03/11/98 19,779,583
Unifunding Inc.
19,000,000 5.52 01/05/98 18,988,347
RECEIVABLE/ASSET FINANCINGS
Asset Securitization Corp.
11,000,000 5.69 02/24/98 10,906,115
CC USA, Inc.
36,000,000 5.60 01/08/98 35,960,800
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER AND CORPORATE OBLIGATIONS (CONTINUED)
RECEIVABLE/ASSET FINANCINGS (CONTINUED)
Delaware Funding
$ 60,000,000 5.69% 02/20/98 $ 59,525,833
Enterprise Funding Corp.
37,432,000 5.74 01/13/98 37,360,380
28,191,000 5.73 01/29/98 28,065,362
Eureka Securities
40,000,000 5.69 02/04/98 39,785,044
40,000,000 5.69 02/12/98 39,734,467
Falcon Asset Securitization Corp.
20,675,000 5.74 01/16/98 20,625,552
Windmill Funding Corp.
25,000,000 5.65 01/23/98 24,913,681
50,000,000 5.70 02/05/98 49,722,917
SECURITY AND COMMODITY BROKERS, DEALERS AND SERVICES
Bear Stearns Companies, Inc.
35,000,000 5.62 01/29/98 34,847,011
30,000,000 5.71 02/17/98 29,776,358
25,000,000 5.75 03/09/98 24,732,465
20,000,000 5.74 03/12/98 19,776,778
JP Morgan Securities, Inc.(a)
50,000,000 5.98 01/09/98 50,000,000
Merrill Lynch & Co., Inc.
35,000,000 5.96 01/02/98 34,998,695
10,000,000 5.97 08/14/98 10,000,000
Morgan Stanley Dean Witter, Inc.
70,000,000 5.69 02/23/98 69,413,614
Smith Barney Holdings, Inc.
60,000,000 5.70 02/11/98 59,610,500
- ------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER AND CORPORATE
OBLIGATIONS $1,496,443,021
- ------------------------------------------------------------------------------------------------
BANK NOTES--1.7%
First National Bank of Boston, N.A.
$ 25,000,000 5.82% 05/26/98 $ 25,000,000
25,000,000 6.00 08/17/98 25,000,000
Huntington National Bank
7,000,000 5.82 11/13/98 6,997,680
National Australia Bank, Ltd., New York
26,000,000 5.85 10/05/98 25,993,684
- ------------------------------------------------------------------------------------------------
TOTAL BANK NOTES $ 82,991,364
- ------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - FOREIGN EURODOLLAR--6.1%
Abbey National Treasury Services
$ 25,000,000 5.86% 11/12/98 $ 25,000,000
Bank of Tokyo, Mitsubishi Bank Ltd., New York
65,000,000 5.80 01/26/98 64,998,737
</TABLE>
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
7
<PAGE>
Statement of Investments
- --------------------------------------------------------------------------------
FINANCIAL SQUARE MONEY MARKET FUND (continued)
December 31, 1997
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CERTIFICATES OF DEPOSIT - FOREIGN EURODOLLAR (CONTINUED)
Norinchukin Bank, London
$ 30,000,000 6.27% 01/20/98 $ 30,000,235
Royal Bank of Canada, New York
50,000,000 5.81 06/03/98 50,000,000
Sanwa Bank Limited, London
40,000,000 6.12 01/14/98 40,000,143
75,000,000 5.79 01/26/98 75,000,513
Sumitomo Bank, London
13,000,000 5.76 01/16/98 12,999,776
- ---------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT - FOREIGN
EURODOLLAR $ 297,999,404
- ---------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - YANKEEDOLLAR--13.4%
Bank of Tokyo Mitsubishi, New York
$ 85,000,000 6.00% 01/14/98 $ 85,000,000
Canadian Imperial Bank of Commerce, New York
63,000,000 5.94 03/17/98 62,996,286
Credit Agric Indosuez, New York
60,000,000 5.95 08/13/98 59,982,404
Landesbank Hessen Thuringen
60,000,000 5.93 06/30/98 59,965,794
National Bank of Canada, New York
50,000,000 6.03 03/18/98 49,997,910
Norinchukin Bank, New York
100,000,000 5.73 01/05/98 100,000,109
Rabobank Nederland
50,000,000 6.07 03/26/98 49,995,606
45,000,000 6.05 03/27/98 44,988,000
Sanwa Bank Ltd., New York
31,000,000 5.76 01/22/98 30,999,422
36,000,000 5.76 01/27/98 35,999,488
Societe Generale, New York
25,000,000 6.05 03/24/98 24,997,319
25,000,000 5.91 10/15/98 24,988,723
25,000,000 5.91 10/20/98 24,981,841
- ---------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT - YANKEEDOLLAR $ 654,892,902
- ---------------------------------------------------------------------------------------------
TAXABLE MUNICIPAL NOTES--0.6%
Florida Housing Finance Authority
$ 28,400,000 5.90%(a) 01/07/98 $ 28,400,000
- ---------------------------------------------------------------------------------------------
TOTAL TAXABLE MUNICIPAL NOTES $ 28,400,000
- ---------------------------------------------------------------------------------------------
TIME DEPOSIT--4.1%
Wachovia Bank, N.A.
$200,000,000 6.50% 01/02/98 $ 200,000,000
- ---------------------------------------------------------------------------------------------
TOTAL TIME DEPOSIT $ 200,000,000
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VARIABLE RATE DEMAND NOTES(A)--39.3%
Abbey National
$150,000,000 5.86% 01/15/98 $ 149,946,853
ABN/AMRO Bank, New York
60,000,000 6.17 01/02/98 59,994,732
American Express Centurion Bank
15,000,000 5.93 01/20/98 15,000,000
15,000,000 5.95 01/13/98 15,000,000
15,000,000 5.97 01/08/98 15,000,000
Ameritech Corp.
17,000,000 5.83 01/12/98 17,004,985
Amsouth Bank of Alabama, N.A.
50,000,000 5.91 01/15/98 49,993,001
Bank One Columbus, N.A.
25,000,000 5.57 01/06/98 24,994,534
50,000,000 5.55 01/06/98 49,985,789
Bayerische Landesbank
15,000,000 5.84 01/26/98 14,994,374
Comerica Bank Detroit
55,000,000 5.90 01/05/98 54,996,433
90,000,000 5.88 01/15/98 89,982,362
50,000,000 5.85 01/20/98 49,984,056
12,000,000 5.80 03/11/98 11,994,765
Corestates Bank, N.A.
15,000,000 5.96 01/06/98 15,000,000
50,000,000 5.95 01/29/98 50,000,000
Dakota Certificates of Standard Credit Card Master Trust
10,000,000 5.69 03/10/98 9,960,417
50,000,000 5.73 01/26/98 49,458,833
Dauphin Deposit Bank & Trust
15,000,000 5.66 02/04/98 14,996,569
50,000,000 5.70 01/14/98 50,001,042
Den Danske Bank, New York
50,000,000 5.91 01/16/98 49,997,210
25,000,000 5.92 01/26/98 24,998,206
35,000,000 5.92 01/26/98 34,998,372
FCC National Bank
110,000,000 6.16 01/02/98 109,981,616
40,000,000 5.74 01/28/98 39,982,295
First Bank FSB
50,000,000 5.86 01/21/98 49,987,048
First Bank, N.A.
25,000,000 5.87 01/21/98 24,994,940
50,000,000 5.87 01/21/98 49,989,223
Fleet Financial Group
10,000,000 5.91 02/13/98 10,001,798
General Electric Capital Corp.
90,000,000 5.70 02/02/98 90,000,000
</TABLE>
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VARIABLE RATE DEMAND NOTES (CONTINUED)
Merrill Lynch & Co., Inc.
$ 35,000,000 5.94% 01/13/98 $ 34,998,670
Morgan Stanley Dean Witter(b)
80,000,000 5.54 04/15/98 79,992,280
National Bank of Canada, New York
20,000,000 6.04 03/08/98 20,002,565
Nationsbank Corp.
25,000,000 5.89 03/12/98 25,000,000
24,000,000 6.06 03/24/98 24,009,156
New York Life Insurance
40,000,000 5.89 03/03/98 40,000,000
PNC Bank, N.A.
25,000,000 6.13 01/02/98 24,990,887
Postipankki, Inc.
100,000,000 5.73 02/04/98 100,000,000
SMM Trust Series 1997-X
35,000,000 6.00 01/12/98 35,000,000
Societe Generale, New York
40,000,000 6.19 01/02/98 39,997,340
Southtrust Bank of Alabama, N.A.
150,000,000 5.90 01/12/98 149,967,235
Sunamerica Life Insururance Co.
50,000,000 6.06 01/02/98 50,000,000
U.S. Bank, N.A.
10,000,000 6.24 03/10/98 10,024,395
- ----------------------------------------------------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTES $1,927,201,981
- ----------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--7.9%
Joint Repurchase Agreement Account(c)
$389,700,000 6.40% 01/02/98 $ 389,700,000
- ----------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS $ 389,700,000
- ----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $5,077,628,672(d)
- ----------------------------------------------------------------------------------------------
</TABLE>
- ---------
- ---------
(a) Variable rate security-base index is either U.S. Treasury Bill, one or
three month LIBOR, one month commercial paper, Federal Funds, or Prime
lending rate.
(b) When-issued securities.
(c) Portions of this security is being segragated for when-issued securities.
(d) The amount stated also represents aggregate cost for federal income tax
purposes.
Interest rates represent either the stated coupon rate, annualized yield on
date of purchase for discounted notes, or, for floating rate securities, the
current reset rate, which is based upon current interest rate indices.
Maturity dates represent either the stated date on the security, the next
interest reset date for floating rate securities, or the prerefunded date for
those types of securities.
The percentages shown for each investment category reflect the value of
investments in that category as a percentage of total net assets.
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
9
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL SQUARE PREMIUM MONEY MARKET FUND
December 31, 1997
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER AND CORPORATE OBLIGATIONS--41.7%
Associates Corp. of North America
$ 5,000,000 5.59% 01/26/98 $ 4,980,590
Henkel Corp.
6,000,000 5.60 01/14/98 5,987,867
BUSINESS CREDIT INSTITUTIONS
General Electric Capital Corp.
3,000,000 5.51 01/14/98 2,994,031
2,000,000 5.57 01/22/98 1,993,502
2,000,000 5.69 02/12/98 1,986,723
FOREIGN BANKS
Cades
5,000,000 5.63 05/29/98 4,884,272
Cariplo Finance
5,000,000 5.65 01/08/98 4,994,507
Commonwealth Bank of Australia
5,000,000 5.60 06/18/98 4,869,333
Credit Suisse First Boston, New York
3,000,000 5.52 01/08/98 2,996,780
3,000,000 5.70 01/15/98 2,993,350
RECEIVABLE/ASSET FINANCINGS
Asset Securitization Corp.
4,000,000 5.69 02/24/98 3,965,860
Beta Finance
7,000,000 5.63 06/16/98 6,818,276
CC USA, Inc.
3,000,000 5.53 01/08/98 2,996,774
Ciesco LP
2,000,000 5.55 01/23/98 1,993,217
Delaware Funding Corp.
5,000,000 5.56 01/16/98 4,988,417
Enterprise Funding Corp.
3,000,000 5.72 01/22/98 2,989,990
2,029,000 5.57 01/26/98 2,021,152
IMI Funding Corp., U.S.A.
5,000,000 5.57 01/15/98 4,989,169
International Securitization Corp.
5,000,000 5.75 01/29/98 4,977,639
Sheffield Receivables Corp.
3,000,000 5.61 01/16/98 2,992,988
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER AND CORPORATE OBLIGATIONS (CONTINUED)
RECEIVABLE/ASSET FINANCINGS (CONTINUED)
Siemens Capital Corp.
$5,000,000 5.59% 06/22/98 $ 4,866,461
Swedish Export Credit Corp.
5,000,000 5.59 06/15/98 4,871,896
Windmill Funding
5,000,000 5.65 01/23/98 4,982,736
- --------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER AND CORPORATE OBLIGATIONS $ 92,135,530
- --------------------------------------------------------------------------------------------------
BANK NOTES--1.4%
Wachovia Bank, N.A.
$3,000,000 5.60% 01/12/98 $ 3,000,000
- --------------------------------------------------------------------------------------------------
TOTAL BANK NOTES $ 3,000,000
- --------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - FOREIGN EURODOLLAR--3.2%
Norinchukin Bank, London
$2,000,000 6.27% 01/20/98 $ 2,000,016
Royal Bank of Canada, New York
5,000,000 5.81 06/03/98 5,000,000
- --------------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT - FOREIGN EURODOLLAR $ 7,000,016
- --------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - YANKEEDOLLAR--8.1%
Bank of Tokyo, Mitsubishi Bank Ltd., New York
$2,000,000 5.85% 01/09/98 $ 2,000,014
3,000,000 6.00 01/14/98 3,000,000
Credit Agric Indosuez, New York
1,000,000 5.95 08/13/98 999,707
Landesbank Hessen Thuringen Gir
3,000,000 5.94 10/23/98 2,998,610
National Bank of Canada, New York
5,875,000 5.71 01/02/98 5,875,001
Norinchukin Bank, New York
3,000,000 5.73 01/05/98 3,000,003
- --------------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT - YANKEEDOLLAR $ 17,873,335
- --------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VARIABLE RATE DEMAND NOTES(B)--9.0%
Comerica Bank Detroit
$ 3,000,000 5.80% 03/11/98 $ 2,998,691
Corestates Bank, N.A.
2,000,000 5.95 01/05/98 2,000,000
Merrill Lynch & Co., Inc.
2,000,000 5.65 01/05/98 1,999,942
Morgan Stanley Dean Witter(a)
5,000,000 5.54 04/15/98 4,999,518
SMM Trust Series 1997-X
2,000,000 6.00 01/01/98 2,000,000
Societe Generale, New York
3,000,000 6.16 01/02/98 2,998,681
Southtrust Bank of Alabama, N.A.
3,000,000 5.90 01/08/98 2,998,990
- ------------------------------------------------------------------------------------------------
TOTAL VARIABLE RATE DEMAND NOTES $ 19,995,822
- ------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--39.3%
BZW Securities, dated 12/31/97, repurchase price $5,001,840 (SLMA:
$5,100,923, 05/21/98)
$ 5,000,000 6.63% 01/02/98 $ 5,000,000
Deutsche Morgan Grenfell, Inc., dated 12/31/97, repurchase price
$5,001,889 (total collateral value $5,100,127 consisting of U.S.
Treasury Bill: 06/11/98; U.S. Treasury Bonds: 11.63%-11.88%, 11/15/02-
11/15/03; U.S. Treasury Notes: 5.75%-7.88%, 01/15/98-08/15/03)
5,000,000 6.80 01/02/98 5,000,000
Joint Repurchase Agreement Account(c)
66,900,000 6.40 01/02/98 66,900,000
Lehman Government Securities, dated 12/31/97, repurchase price
$5,001,836 (total collateral value: $5,100,035, consisting of FNMA:
7.00%-8.50%, 09/01/07-01/01/26)
5,000,000 6.70 01/02/98 5,000,000
UBS Securities, Inc., dated 12/31/97, repurchase price $5,001,795
(U.S. Treasury Note: $5,162,500, 8.13%, 02/15/98)
5,000,000 6.55 01/02/98 5,000,000
- ------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS $ 86,900,000
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $226,904,703(d)
- ------------------------------------------------------------------------------------------------
</TABLE>
- ---------
- ---------
(a) When-issued security.
(b) Variable rate security-base index is either U.S. Treasury Bill, one or
three month LIBOR, one month commercial paper, Federal Funds, or Prime
lending rate.
(c) A portion of this security is being segregated for when-issued securities.
(d) The amount stated also represents aggregate cost for federal income tax
purposes.
Interest rates represent either the stated coupon rate, annualized yield on
date of purchase for discounted notes, or, for floating rate securities, the
current reset rate, which is based upon current interest rate indices.
Maturity dates represent either the stated date on the security, the next
interest reset date for floating rate securities, or the prefunded date for
those types of securities.
The percentages shown for each investment category reflect the value of
investments in that category as a percentage of total net assets.
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
11
<PAGE>
Statement of Investments
- --------------------------------------------------------------------------------
FINANCIAL SQUARE TREASURY OBLIGATIONS FUND
December 31, 1997
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS--15.2%
United States Treasury Notes
$ 70,000,000 6.13% 03/31/98 $ 70,041,209
127,000,000 7.88 04/15/98 127,677,326
110,000,000 6.25 07/31/98 110,335,012
50,000,000 5.88 08/15/98 50,042,411
50,000,000 5.88 10/31/98 50,069,089
25,000,000 5.88 10/31/98 25,025,215
50,000,000 5.75 12/31/98 50,010,854
50,000,000 5.88 01/31/99 50,101,307
- ---------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS $ 533,302,423
- ---------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--85.0%
Bear Stearns Companies, Inc., dated 12/31/97, repurchase price
$165,057,292 (Total collateral value $168,277,838 consisting of U.S.
Treasury Bills: 04/02/98; U.S. Treasury Note: 5.75%, 11/15/00)
$ 165,000,000 6.25% 01/02/98 $ 165,000,000
BZW Securities dated 12/31/97, repurchase price $165,060,729 (total
collateral value $168,300,287 consisting of U.S. Treasury stripped
securities: 02/15/98-11/15/04; U.S. Treasury Notes: 5.13%-8.00%,
11/30/98-08/31/02; U.S. Treasury Bond: 13.75%, 08/15/04)
165,000,000 6.63 01/02/98 165,000,000
CIBC Oppenheimer, Inc., dated 12/31/97, repurchase price $165,059,583
(U.S. Treasury Notes: $168,304,860, 5.50%-6.38%, 02/28/99-08/15/00)
165,000,000 6.50 01/02/98 165,000,000
C.S. First Boston Corp., dated 12/11/97, repurchase price $152,095,208
(U.S. Stripped Securities: $153,054,748. 02/15/98-11/15/04)
150,000,000 5.65 03/10/98 150,000,000
Deutsche Morgan Grenfell, Inc., dated 12/31/97, repurchase price
$165,062,333 (Total collateral value $168,300,705 consisting of U.S.
Treasury Stripped Securities: 08/15/99-08/15/02; U.S. Treasury Notes:
5.63%-7.50%, 11/30/98-11/15/05)
165,000,000 6.80 01/02/98 165,000,000
Goldman, Sachs & Co., dated 12/31/97, repurchase price $165,059,583 (U.S.
Treasury Note: $168,300,521, 5.75%, 09/30/99)
165,000,000 6.50 01/02/98 165,000,000
Joint Repurchase Agreement Account
1,024,200,000 6.40 01/02/98 1,024,200,000
JP Morgan Securities, Inc., dated 12/31/97, repurchase price $165,057,292
(U.S. Treasury Notes: $168,302,651, 6.25%-6.50%, 08/31/01-02/28/02)
165,000,000 6.25 01/02/98 165,000,000
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS (CONTINUED)
Lehman Government Securities, Inc., dated 12/31/97, repurchase price
$165,059,125 (U.S. Treasury Note: $168,289,206, 5.63%, 11/30/99)
$ 165,000,000 6.45% 01/02/98 $ 165,000,000
Merrill Lynch Government Securities, Inc., dated 12/31/97, repurchase
price $165,059,583 (Total collateral value $168,300,113 consisting of
U.S. Treasury Bills: 01/02/98-12/10/98; U.S. Treasury Bond: 3.50%,
11/15/98; U.S. Treasury Notes: 6.38%-7.75%, 01/15/00-01/31/00; U.S.
Treasury Stripped Securities: 5.75%-9.25%. 05/15/98-11/30/99)
165,000,000 6.50 01/02/98 165,000,000
Morgan Stanley & Co., dated 12/31/97, repurchase price $165,057,292
(U.S. Treasury Notes: $168,302,832, 5.63%-7.88%, 11/30/98-08/15/01)
165,000,000 6.25 01/02/98 165,000,000
Nomura Securities International, Inc., dated 12/31/97, repurchase price
$165,066,458 (U.S. Treasury Notes: $168,305,269, 6.12%-7.75%,
12/21/99-12/31/01)
165,000,000 7.25 01/02/98 165,000,000
UBS Securities, Inc., dated 12/31/97, repurchase price $165,060,042
(U.S. Treasury Notes: $170,525,247, 7.125%-7.5%, 11/15/01-10/15/98)
165,000,000 6.55 01/02/98 165,000,000
- -------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS $2,989,200,000
- -------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $3,522,502,423(a)
- -------------------------------------------------------------------------------------------
</TABLE>
(a) The amount stated also represents aggregate cost for federal income tax
purposes.
The percentages shown for each investment category reflects the value of the
investments in that category as a percentage of total net assets.
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
12
<PAGE>
Statement of Investments
- --------------------------------------------------------------------------------
FINANCIAL SQUARE TREASURY INSTRUMENTS FUND
December 31, 1997
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS--99.3%
United States Treasury Bills
$ 65,000,000 4.70% 01/22/98 $ 64,821,792
50,000,000 4.75 01/22/98 49,861,458
2,500,000 5.00 01/22/98 2,492,716
23,600,000 5.10 01/22/98 23,529,790
4,600,000 5.15 01/22/98 4,586,181
3,400,000 5.17 01/22/98 3,389,746
8,600,000 5.20 01/22/98 8,573,914
65,000,000 5.12 02/05/98 64,676,760
20,000,000 4.95 02/12/98 19,884,500
13,400,000 5.12 02/12/98 13,319,957
United States Treasury Notes
16,600,000 7.88 01/15/98 16,618,156
8,000,000 5.00 01/31/98 7,996,000
96,800,000 5.63 01/31/98 96,793,075
35,000,000 7.25 02/15/98 35,069,845
10,000,000 5.13 02/28/98 9,990,057
50,000,000 7.88 04/15/98 50,328,250
25,000,000 5.13 04/30/98 24,969,979
20,000,000 6.00 05/31/98 20,033,373
- -------------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS $516,935,549
- -------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $516,935,549(a)
- -------------------------------------------------------------------------------------------------
</TABLE>
(a) The amount stated also represents aggregate cost for federal income tax
purposes.
The percentages shown for each category reflect the value of investments in
that category as a percentage of total net assets.
- --------------------------------------------------------------------------------
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
13
<PAGE>
Statement of Investments
- --------------------------------------------------------------------------------
FINANCIAL SQUARE GOVERNMENT FUND
December 31, 1997
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS--40.9%
Federal Farm Credit Bank
$ 25,000,000 5.45% 03/03/98 $ 24,975,385
75,000,000 5.80(a) 04/14/98 74,981,276
50,000,000 5.70 12/01/98 49,951,782
35,970,000(b) 5.65 01/04/99 35,917,844
Federal Home Loan Bank
41,000,000 5.83(a) 03/06/98 40,994,655
59,000,000 5.79(a) 03/18/98 58,991,023
100,000,000 5.82(a) 04/14/98 99,980,582
10,000,000 5.72 06/23/98 9,997,563
65,000,000 5.75 07/02/98 64,973,616
40,000,000 5.71 10/01/98 39,990,824
Federal Home Loan Mortgage Corp.
20,000,000 5.72 03/17/98 19,994,674
Federal National Mortgage Association
40,000,000 5.59(a) 01/15/98 39,999,080
34,000,000 5.63 03/13/98 33,622,477
20,000,000 5.71 03/18/98 19,994,586
70,000,000 5.79 03/25/98 69,996,253
40,000,000 6.02 04/15/98 39,988,033
14,505,000 6.08 05/06/98 14,520,047
30,000,000 5.89 05/21/98 29,990,509
100,000,000 5.79(a) 07/15/98 99,966,209
50,000,000 5.75(a) 09/15/98 49,968,842
Student Loan Marketing Association
49,000,000 5.79 09/16/98 48,992,550
- ---------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS $967,787,810
- ---------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--60.7%
CIBC Oppenheimer, Inc., dated 12/31/97, repurchase price $100,036,111
(U.S. Treasury Notes: $102,002,643, 5.13%-6.00%, 04/30/98-12/31/99)
$ 100,000,000 6.50% 01/02/98 $100,000,000
Deutsche Morgan Grenfell, Inc., dated 12/31/97, repurchase price
$100,037,778 (total collateral value $102,000,788 consisting of
FHLMC: 5.50%-8.50%, 01/15/98-12/01/07; FHLB: 01/16/98; FNMA: 5.50%-
9.50%, 12/01/99-12/01/07; U.S. Treasury bill: 03/05/98; U.S. Treasury
Bond: 8.25%, 05/15/05; U.S. Treasury Notes: 5.63%-7.13%, 02/28/99-
10/31/99; U.S. Treasury stripped securities; 02/15/00-08/15/04; U.S.
Treasury Inflation Indexed Note: 3.38%, 01/15/07)
100,000,000 6.80 01/02/98 100,000,000
Goldman, Sachs & Co., dated 12/10/97, repurchase price $202,818,333
(FNMA: $204,000,000, 6.00%-9.00%, 03/01/99-12/01/07)
200,000,000 5.70 03/09/98 200,000,000
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS (CONTINUED)
Joint Repurchase Agreement Account(c)
$336,400,000 6.40% 01/02/98 $ 336,400,000
JP Morgan Securities, Inc., dated 12/31/97, repurchase price $100,036,667
(FNMA: $102,002,181, 6.00%-9.05%, 08/19/99-07/15/02)
100,000,000 6.60 01/02/98 100,000,000
Lehman Government Securities, Inc., dated 12/31/97, repurchase price
$100,036,667 (Total Collateral value $102,001,527 consisting of FHLMC:
6.50%-10.00%, 03/01/01-09/01/26; FNMA: 6.50%-11.50%, 02/01/04-07/01/26)
100,000,000 6.60 01/02/98 100,000,000
Merrill Lynch Government Securities, Inc., dated 12/31/97, repurchase price
$100,036,667 (Total Collateral value $102,001,527 consisting of FFCB:
5.50%-14.05%, 01/02/98-06/02/03; FNMA: 5.10%-8.25%, 05/13/98-11/12/02;
FHLMC: 5.00%-8.14%, 12/15/98-04/20/05; FHLB: 06/20/07)
100,000,000 6.60 01/02/98 100,000,000
Morgan Stanley Group, Inc., dated 10/28/97, repurchase price $202,800,000
(FHLMC: $204,238,009, 5.50%-9.50%, 10/01/98-12/01/27)
200,000,000 5.60 01/26/98 200,000,000
Nomura Securities International, Inc., dated 12/31/97, repurchase price
$100,038,333 (FFCB: $102,001,213, 5.50%-5.65%, 01/02/98-02/02/98)
100,000,000 6.90 01/02/98 100,000,000
UBS Securities, Inc., dated 12/31/97, repurchase price $100,036,389
(U.S. Treasury Note $102,001,048, 8.50%, 02/15/00)
100,000,000 6.55 01/02/98 100,000,000
</TABLE>
<TABLE>
- --------------------------------
<S> <C> <C> <C>
TOTAL
REPURCHASE
AGREEMENTS $1,436,400,000
- --------------------------------
TOTAL
INVESTMENTS $2,404,187,810(d)
- --------------------------------
</TABLE>
(a) Variable rate security-base index is either Federal Funds, Prime lending
rate, or one month LIBOR.
(b) When-issued security.
(c) Portion of this security is being segregated for when-issued securities.
(d) The amount stated also represents aggregate cost for federal income tax
purposes.
Interest rates represent either the stated coupon rate, annualized yield on
date of purchase for discounted notes, or, for floating rate securities, the
current reset rate, which is based upon current interest rate indices.
The percentages shown for each investment category reflect the value of
investments in that category as a percentage of total net assets.
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
14
<PAGE>
Statement of Investments
- --------------------------------------------------------------------------------
FINANCIAL SQUARE FEDERAL FUND
December 31, 1997
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS--102.6%
Federal Farm Credit Bank
$ 20,000,000 5.48% 01/05/98 $ 19,987,822
90,000,000 5.72 01/06/98 89,928,500
29,000,000 5.50 01/06/98 28,977,847
15,000,000 5.45 01/07/98 14,986,375
15,000,000 5.60 01/07/98 14,986,000
25,000,000 5.49 01/09/98 24,969,500
21,700,000 5.47 01/15/98 21,653,839
25,000,000 5.65 01/15/98 24,945,071
20,000,000 5.58 01/28/98 19,916,300
50,000,000(a) 5.53(b) 01/30/98 49,985,210
15,000,000 5.57 02/02/98 14,925,733
9,000,000 5.60 02/02/98 8,955,200
12,300,000 5.65 02/02/98 12,238,227
45,000,000 5.60 02/04/98 44,762,000
23,000,000 5.62 02/05/98 22,874,331
20,000,000 5.60 02/05/98 19,891,111
5,000,000 5.60 02/11/98 4,968,111
5,000,000 5.57 02/12/98 4,967,505
50,000,000(c) 5.65 02/12/98 50,000,000
3,000,000 5.57 02/18/98 2,977,720
10,000,000 5.45 03/03/98 9,990,170
75,000,000 5.80(b) 04/14/98 74,981,276
15,000,000 5.49 06/15/98 14,622,563
125,000,000 5.74(b) 09/02/98 124,929,808
10,000,000 5.75 09/11/98 9,993,762
15,000,000 5.70 12/01/98 14,985,535
Federal Home Loan Bank
23,900,000 4.82 01/02/98 23,896,800
190,000,000 4.90 01/02/98 189,974,139
25,000,000 5.10 01/02/98 24,996,458
5,000,000 5.36 01/02/98 4,999,256
108,100,000 5.68 01/05/98 108,031,777
15,075,000 5.39 01/09/98 15,056,944
5,100,000 5.47 01/09/98 5,093,801
21,309,000 5.75 01/14/98 21,264,754
8,000,000 5.74 01/15/98 7,982,142
29,500,000 5.75 01/21/98 29,405,764
27,000,000 5.46 02/04/98 26,860,770
30,000,000 5.48 02/11/98 29,812,767
25,000,000 5.65 02/11/98 24,839,132
15,000,000 5.49 02/13/98 14,901,727
35,000,000 5.65 02/13/98 34,763,799
25,000,000 5.51 02/18/98 24,816,333
20,000,000 5.65 02/18/98 19,849,333
25,000,000 5.57 03/04/98 24,760,181
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (CONTINUED)
Federal Home Loan Bank (continued)
$ 10,000,000 5.61% 03/04/98 $ 9,903,383
25,000,000 5.83(b) 03/06/98 24,996,741
2,500,000 5.37 04/01/98 2,466,438
43,430,000 5.37 04/01/98 42,846,952
23,950,000 5.51 04/01/98 23,620,089
50,000,000 5.52 04/01/98 49,310,000
1,100,000 5.37 04/03/98 1,084,904
25,000,000 5.82(b) 04/14/98 24,994,799
20,000,000 5.59 04/22/98 19,655,283
26,900,000 5.47 05/15/98 26,352,301
65,000,000 5.75(b) 07/02/98 64,971,614
50,000,000 5.77(b) 07/07/98 49,975,070
25,000,000 5.74(b) 09/17/98 24,986,044
45,000,000 5.75(b) 10/02/98 44,973,681
20,000,000 5.70 10/23/98 19,985,290
Student Loan Marketing Association
50,000,000 5.10 01/02/98 49,992,917
35,000,000 5.47 01/27/98 34,861,731
15,000,000 5.48 01/27/98 14,940,633
5,430,000 5.54 02/25/98 5,428,550
30,050,000 5.79 09/16/98 30,066,907
Tennessee Valley Authority
46,420,000 5.46 01/12/98 46,342,556
12,100,000 5.64 01/16/98 12,071,565
40,000,000 5.47 02/10/98 39,756,889
25,000,000 5.51 02/20/98 24,808,681
25,000,000 5.57 02/24/98 24,791,125
50,000,000 5.57 03/09/98 49,481,681
35,000,000 5.57 03/11/98 34,626,346
25,000,000 5.58 03/13/98 24,724,875
30,000,000 5.57 03/20/98 29,637,950
- ----------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS $2,229,360,388
- ----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $2,229,360,388(d)
- ----------------------------------------------------------------------------------------------
</TABLE>
(a) This security is being segregated for when-issued security.
(b) Variable rate security-base index is either Federal Funds, Prime lending
rate, or one month LIBOR.
(c) When-issued security.
(d) The amount stated also represents aggregate cost for federal income tax
purposes.
Interest rates represent either the stated coupon rate, annualized yield on
date of purchase for discounted notes, or, for floating rate securities, the
current reset rate, which is based upon current interest rate indices.
The percentages shown for each investment category reflect the value of
investments in that category as a percentage of total net assets.
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
15
<PAGE>
Statement of Investments
- --------------------------------------------------------------------------------
FINANCIAL SQUARE TAX-FREE MONEY MARKET FUND
December 31, 1997
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
ALABAMA--3.1%
Columbia IDB PCRB for Alabama Power Co. Series 1996 A
(A-1/VMIG1)
$ 1,200,000 4.80% 01/02/98 $ 1,200,000
Columbia IDB PCRB for Alabama Power Company Series 1995 B
(A-1/VMIG1)
3,300,000 4.80 01/02/98 3,300,000
Eutaw City IDB PCRB for Mississippi Power Co. Greene County Plant Project
Series 1992 (A-1/VMIG1)
6,550,000 4.25 01/07/98 6,550,000
Gadsden City IDB PCRB for Alabama Power Co. Series 1994
(A-1/VMIG1)
3,950,000 4.80 01/02/98 3,950,000
Homewood City Educational Building Authority RB for Samford University
Series 1996 (Bank of Nova Scotia LOC) (A-1/VMIG1)
1,200,000 4.80 01/02/98 1,200,000
Jefferson County MF Hsg. RB for Hickory Knolls Project Series 1994
(Amsouth Bank LOC) (P-1)
3,910,000 4.25 01/07/98 3,910,000
Mobile IDA PCRB for Alabama Power Series 1993A (A-1/VMIG1)
3,000,000 4.10 01/07/98 3,000,000
Mobile IDA PCRB for Alabama Power Series 1994 (A-1/VMIG1)
3,700,000 4.80 01/02/98 3,700,000
Montgomery Special Care RB Series 1994 A (Amsouth Bank LOC) (VMIG1)
8,000,000 4.20 01/07/98 8,000,000
- -----------------------------------------------------------------------------------------------
$ 34,810,000
- -----------------------------------------------------------------------------------------------
ALASKA--1.0%
Valdez Marine Terminal RB for Exxon Corporation Series 1993 C (A-1+)
$11,200,000 5.00% 01/02/98 $ 11,200,000
- -----------------------------------------------------------------------------------------------
ARKANSAS--0.4%
Crossett City PCRB for Georgia Pacific Corp. Series 1991 VRDN (Suntrust
Bank LOC) (AA3)
$ 4,500,000 4.20% 01/07/98 $ 4,500,000
- -----------------------------------------------------------------------------------------------
CALIFORNIA--1.7%
California School Cash Reserves Program Authority Pool Bonds Series 1997 A
(AMBAC) (SP-1+/MIG1)
$ 4,000,000 4.75% 07/02/98 $ 4,016,979
California State RANS Series 1997 (SP-1+/MIG1)
9,500,000 4.50 06/30/98 9,534,384
Los Angeles County TRANS Series 1997-98 A (SP-1+/MIG1)
6,000,000 4.50 06/30/98 6,017,370
- -----------------------------------------------------------------------------------------------
$ 19,568,733
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
COLORADO--2.2%
Colorado Health Facilities Authority Series 92 C (A-1+/VMIG1)
$15,200,000 4.15% 01/07/98 $ 15,200,000
Denver Airport System Subordinate RB Series 1997 B (Westdeutsche
Landesbank Girozentrale) (A-1+/VMIG1)
7,000,000 4.10 01/07/98 7,000,000
Moffat County PCRB for Pacificorp Series 1994 (AMBAC) (A-1/VMIG1)
3,000,000 5.10 01/02/98 3,000,000
- -----------------------------------------------------------------------------------------------
$ 25,200,000
- -----------------------------------------------------------------------------------------------
CONNECTICUT--1.8%
State of Connecticut 2nd Lien Special TRANS VRDN Series 1 (Commerzbank
Bank LOC) (A-1+/VMIG1)
$20,700,000 3.65% 01/07/98 $ 20,700,000
- -----------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--0.3%
District of Columbia VRDN ACES for Georgetown University Series 1988 B
(Bayerische Landesbank Girozentrale) (A-1+/VMIG1)
$ 600,000 3.80% 01/07/98 $ 600,000
District of Columbia VRDN ACES for Georgetown University Series 1988 C
(Bayerische Landesbank Girozentrale) (A-1+/VMIG1)
2,500,000 3.80 01/07/98 2,500,000
- -----------------------------------------------------------------------------------------------
$ 3,100,000
- -----------------------------------------------------------------------------------------------
FLORIDA--2.4%
Florida Local Government Pooled CP Notes Series A (First Union National
Bank of Florida LOC) (A-1/P-1)
$10,625,000 3.85% 01/14/98 $ 10,625,000
5,500,000 3.75 03/11/98 5,500,000
Putnam County Development Authority Floating/Fixed Rate PCRB for Seminole
Electric Cooperative Series 1984 H (CFC) (A-1+/P-1)
7,845,000 3.85 01/07/98 7,845,000
Putnam County Development Authority Floating/Fixed Rate PCRB for Seminole
Electric Cooperative Series 1984 S (CFC) (A-1+/P-1)
2,715,000 3.85 01/07/98 2,715,000
- -----------------------------------------------------------------------------------------------
$ 26,685,000
- -----------------------------------------------------------------------------------------------
GEORGIA--12.9%
Bartow County IDA PCRB for Georgia Power Co. First Series 1997 (VMIG1)
$ 9,000,000 4.80% 01/02/98 $ 9,000,000
Burke County IDA PCRB for Georgia Power Co. Fifth Series 1995 (VMIG1)
13,370,000 5.05 01/02/98 13,370,000
</TABLE>
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
GEORGIA (CONTINUED)
Burke County IDA PCRB for Georgia Power Co. Second Series 1995 (A-1/VMIG1)
$ 3,700,000 4.80% 01/02/98 $ 3,700,000
Burke County IDA PCRB for Georgia Power Co. Eighth Series 1994 (A-1/VMIG1)
1,600,000 5.05 01/02/98 1,600,000
Burke County IDA PCRB for Georgia Power Co. Ninth Series 1994 (A-1/VMIG1)
7,700,000 5.05 01/02/98 7,700,000
Burke County IDA PCRB for Oglethorpe Power Series 1994 A (FGIC) (A-1+)
13,900,000 4.15 01/07/98 13,900,000
De Kalb County Hospital RB Series 1993B (Suntrust) (VMIG1)
2,230,000 4.20 01/07/98 2,230,000
Effingham County IDA PCRB for Savannah Electric And Power Co. Series 1997
(A-1/VMIG1)
3,000,000 5.05 01/02/98 3,000,000
Floyd County PCRB for Georgia Power Co. First Series 1996 (A-1/VMIG1)
4,000,000 5.05 01/02/98 4,000,000
Georgia Municipal Gas Authority RB for Gas Portfolio II Project Series B
(C.S. First Boston/Morgan Guaranty/Bayerische Landesbank
Girozentrale/Wachovia Bank ABN/AMRO) (A-1+)
19,000,000 3.65 01/07/98 19,000,000
Georgia Municipal Gas Authority RB for Gas Portfolio II Project Series B
(C.S. First Boston/Morgan Guaranty/Bayerische Landesbank Girozentrale)
(A-1+/VMIG1)
29,500,000 3.65 01/07/98 29,500,000
Municipal Electric Authority of Georgia Subordinated General Resolution
Bonds Series 1985 B (C.S. First Boston/Morgan Guaranty/Bayerische
Landesbank Girozentrale LOC)
(A-1+/VMIG1)
7,200,000 3.65 01/07/98 7,200,000
Municipal Electric Authority of Georgia Project One Subordinated Bonds
Series 1994 E (ABN/AMRO Bank) (A-1+/VMIG1)
14,095,000 3.85 01/07/98 14,095,000
Municipal Electric Authority of Georgia Project One Subordinated Bonds
Series 1985 B (C.S. First Boston/Morgan Guaranty/Bayerische Landesbank
Girozentrale LOC) (A-1+/VMIG1)
6,000,000 3.80 05/14/98 6,000,000
Municipal Electric Authority of Georgia Project One Subordinated Bonds
Series 1994 D (A-1+/VMIG1)
4,000,000 3.70 01/07/98 4,000,000
Municipal Electric Authority of Georgia Subordinated General Resolution
Bonds Series 1985 C (C.S. First Boston/Morgan Guaranty/Bayerische
Landesbank Girozentrale LOC) (A-1+/VMIG1)
6,400,000 3.70 01/07/98 6,400,000
- -----------------------------------------------------------------------------------------------
$ 144,695,000
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
IDAHO--1.2%
Idaho Health Facilities RB for Holy Cross Health Systems Series 1995
(A-1/VMIG1)
$13,000,000 4.15% 01/07/98 $ 13,000,000
- -----------------------------------------------------------------------------------------------
ILLINOIS--7.7%
Chicago GO Tender Notes Series 1997 (SP-1+/MIG1)
$17,000,000 3.65% 02/05/98 $ 16,998,432
Illinois Health Facilities Authority VRDN for Central Dupage Hospital
Series 1990 (Rabobank Nederland LOC ) (VMIG1)
6,200,000 5.10 01/02/98 6,200,000
Illinois Health Facilities Authority VRDN for Northwest Community Hospital
Series 1997 (A-1+/VMIG1)
8,400,000 4.15 01/07/98 8,400,000
Illinois Health Facilities Authority VRDN for Resurrection Healthcare
Series 1993 (VMIG1)
18,800,000 5.05 01/02/98 18,800,000
Illinois Health Facilities Authority VRDN Revolving Fund Pooled Finance
Program Series 1985 C (First National Bank of Chicago LOC) (A-1+/VMIG1)
4,000,000 3.80 01/07/98 4,000,000
Illinois Health Facilities Authority VRDN Revolving Fund Pooled Finance
Program Series 1985 D (First National Bank of Chicago LOC) (A-1+/VMIG1)
21,000,000 3.80 01/07/98 21,000,000
Sauget Village PCRB VRDN for Monsanto Series 1992 (P-1)
1,000,000 3.80 01/07/98 1,000,000
Sauget Village PCRB VRDN for Monsanto Series 1993 (P-1)
1,900,000 3.80 01/07/98 1,900,000
Societe Generale Municipal Securities Trust Receipts RB for Chicago Midway
Airport Series 1996 A (MBIA) (A-1+C)
7,540,000 4.25 01/07/98 7,540,000
- -----------------------------------------------------------------------------------------------
$ 85,838,432
- -----------------------------------------------------------------------------------------------
INDIANA--5.6%
Fort Wayne Hospital Authority VRDN for Parkview Memorial Hospital Series
1985 B (Bank of America LOC) (VMIG1)
$ 1,600,000 3.65% 01/07/98 $ 1,600,000
Indiana Health Facility Authority Variable Rate Hospital RB for Daughters
of Charity National Health System
Series 1997 E (A-1+/VMIG1)
14,000,000 3.65 01/07/98 14,000,000
Jasper County PCRB for Nipsco Series 1994 A (A-1/VMIG1)
8,500,000 5.10 01/02/98 8,500,000
</TABLE>
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
17
<PAGE>
Statement of Investments
- --------------------------------------------------------------------------------
FINANCIAL SQUARE TAX-FREE MONEY MARKET FUND (continued)
December 31, 1997
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
INDIANA (CONTINUED)
Jasper County PCRB Nipsco Series 1994 C (A-1/VMIG1)
$21,500,000 5.10% 01/02/98 $ 21,500,000
Princeton City PCRB for PSI Energy Inc. Project Series 1996 (Canadian
Imperial Bank of Commerce) (A-1+/VMIG1)
9,500,000 5.10 01/02/98 9,500,000
Warrick County PCRB for Aluminum Company of America Series 1992 (A-1)
7,475,000 4.25 01/07/98 7,475,000
- -----------------------------------------------------------------------------------------------
$ 62,575,000
- -----------------------------------------------------------------------------------------------
IOWA--2.2%
Chillicothe City PCRB for Midwest Power Systems Series 1993 A (A-1/VMIG1)
$ 2,400,000 3.85% 01/07/98 $ 2,400,000
Louisa County PCRB for Iowa-Illinois Gas & Electric Co./Midamerican Energy
Co. Series 1986 A (A-1)
2,700,000 4.00 01/07/98 2,700,000
Louisa County PCRB for Midwest Power Systems Inc. Series 1994 (A-1/VMIG1)
20,000,000 4.00 01/07/98 20,000,000
- -----------------------------------------------------------------------------------------------
$ 25,100,000
- -----------------------------------------------------------------------------------------------
KENTUCKY--4.7%
Calvert PCRB for Air Products and Chemicals, Inc. Project Series 1993 A
(A-1)
$ 3,000,000 4.20% 01/07/98 $ 3,000,000
Kentucky Turnpike Authority Refunding RB Trust Receipts Series 1987 A
(Financial Security Assurance Inc.) (A-1+/VMIG1)
23,000,000 3.90 01/07/98 23,000,000
Mason County Variable/Fixed Rate PCRB for East Kentucky Power Series 1984
B (CFC) (A-1+/P-1)
23,800,000 3.85 01/07/98 23,800,000
Trimble County PCRB for Louisville Gas and Electric Company Series 1996 A
(A-1+/VMIG1)
2,500,000 3.80 05/12/98 2,500,000
- -----------------------------------------------------------------------------------------------
$ 52,300,000
- -----------------------------------------------------------------------------------------------
MASSACHUSETTS--1.1%
Massachusetts Bay Transportation Authority VRDN Series 1984 A (A-1+/VMIG1)
$ 2,800,000 3.75% 03/01/98 $ 2,800,000
Massachusetts Health & Education Authority COPS for Harvard University
Eagle Tax-Exempt Trust Series 972104, Class A (A-1+C)
10,000,000 4.27 01/07/98 10,000,000
- -----------------------------------------------------------------------------------------------
$ 12,800,000
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
MICHIGAN--1.1%
Michigan Job Development Authority PCRB for Autoalliance International,
Inc. Series 1985 (Sumitomo Bank LOC) (VMIG1)
$ 1,400,000 4.65% 01/07/98 $ 1,400,000
Monroe County Economic Development Corp. Ltd. RB Series 1992 CC (Barclays
Bank LOC) (P1)
6,600,000 5.05 01/02/98 6,600,000
State of Michigan GO Notes (SP-1+/MIG1)
4,000,000 4.50 09/30/98 4,021,798
- -----------------------------------------------------------------------------------------------
$ 12,021,798
- -----------------------------------------------------------------------------------------------
MINNESOTA--0.4%
Port Authority of St. Paul VRDN for Weyerhaeuser Project Series 1993 (A/A-
1)
$ 4,000,000 4.20% 01/07/98 $ 4,000,000
- -----------------------------------------------------------------------------------------------
MISSISSIPPI--1.9%
Grenada County Refunding RB for Georgia Pacific Corp. Series 1994
(Sumitomo Bank LOC) (A1)
$ 1,000,000 4.50% 01/07/98 $ 1,000,000
Perry County PCRB for Leaf River Forest Products Inc. Series 1992 (C.S.
First Boston) (P-1)
20,800,000 5.00 01/02/98 20,800,000
- -----------------------------------------------------------------------------------------------
$ 21,800,000
- -----------------------------------------------------------------------------------------------
MISSOURI--1.1%
Missouri Health & Education Facilities Authority RB Series 1984
(A-1+/VMIG1)
$ 6,400,000 3.70% 01/07/98 $ 6,400,000
Missouri Health & Education Facility Authority Tax-Exempt VRDN Series 1995
B (MBIA) (A-1+)
4,500,000 3.70 01/07/98 4,500,000
Missouri Environmental Improvement and Energy Resources Authority VRDN
PCRB for Monsanto Series 1993 (P-1)
1,500,000 3.80 01/07/98 1,500,000
- -----------------------------------------------------------------------------------------------
$ 12,400,000
- -----------------------------------------------------------------------------------------------
MONTANA--0.3%
Montana Health Facilities Authority Health Care RB Pooled Loan Program
Series 1985 A (FGIC) (A-1+/VMIG1)
$ 3,000,000 4.10% 01/07/98 $ 3,000,000
- -----------------------------------------------------------------------------------------------
NEVADA--2.1%
Clark County VRDN for Nevada Airport System (MBIA) (A-1/VMIG1)
$23,340,000 3.65% 01/07/98 $ 23,340,000
- -----------------------------------------------------------------------------------------------
NEW HAMPSHIRE--1.1%
New Hampshire State Business Finance Authority PCRB for New England Power
Series 1990 B (A-1/VMIG1)
$12,000,000 3.75% 03/20/98 $ 12,000,000
- -----------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NEW JERSEY--0.9%
New Jersey TRANS Series 1998 A (A-1+/P-1)
$10,000,000 3.75% 03/11/98 $ 10,000,000
- -----------------------------------------------------------------------------------------------
NEW MEXICO--2.1%
Albuquerque Hospital RB (A-1+/VMIG1)
$ 3,000,000 4.15% 01/07/98 $ 3,000,000
New Mexico TRANS Series 1997 (SP-1+/MIG 1)
20,720,000 4.50 06/30/98 20,785,573
- -----------------------------------------------------------------------------------------------
$ 23,785,573
- -----------------------------------------------------------------------------------------------
NEW YORK--8.7%
Brentwood Union Free School District TRANS Series 1997 (MIG1)
$ 5,000,000 4.25% 06/30/98 $ 5,009,923
Great Neck, NY North Water Authority Water System RB Series 1993 A VRDN
(FGIC) (A-1+/VMIG1)
900,000 3.70 01/07/98 900,000
Municipal Assistance Corp. for The City of New York, Series K, Subseries
K-2 (Bayerische Landesbank Girozentrale LOC) (A-1+/VMIG1)
300,000 3.55 01/07/98 300,000
New York City GO RANS Fiscal 1998 Series A (National Westminster
Bank/Morgan Guaranty Trust/Bayerische Landesbank
Girozentrale/Westdeutsche Landesbank Girozentrale/Societe Generale
Landesbank LOC) (A-1+/MIG1)
50,000,000 4.50 06/30/98 50,175,154
New York City Health & Hospitals Corporation Health System Bonds Series
1997 B (Canadian Imperial Bank of Commerce) (A-1+/VMIG1)
3,000,000 3.55 01/07/98 3,000,000
New York City Municipal Water Finance Authority CP Notes Series 5 A
(Bayerische Landesbank/Westdeutsche Landesbank/Landesbank Hessen-
Thueringen LOC) (A-1+/P-1)
10,000,000 3.80 03/24/98 10,000,000
New York City Puttable Tax-Exempt Receipts GO Bonds Fiscal 1995 Series D
(MBIA) (VMIG1)
7,000,000 4.15 01/07/98 7,000,000
New York City Trust for Cultural Resources Adjustable Rate RB for the
American Museum of Natural History Series 1991B (MBIA) (A-1+/VMIG1)
3,200,000 3.55 01/07/98 3,200,000
New York State Energy Research & Development Authority PCRB for Brooklyn
Union Gas Series 1997 A-1 (MBIA) (A-1+/VMIG1)
6,135,000 3.70 01/07/98 6,135,000
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
New York State Energy Research & Development Authority PCRB for Brooklyn
Union Gas Series 1997 Series A-2 (MBIA) (A-1+/VMIG1)
$ 700,000 3.60% 01/07/98 $ 700,000
New York State Energy Research & Development Authority PCRB for Orange and
Rockland Utilities Series 1994 A (FGIC) (A-1+/VMIG1)
1,700,000 3.55 01/07/98 1,700,000
New York State Energy Research & Development Authority PCRB Rochester Gas
and Electric Corp. Series 1997 B (MBIA) (A-1+/VMIG1)
5,000,000 3.70 01/07/98 5,000,000
New York State Local Government Assistance Corp. VRDN Series 1995 C
(Landesbank Hessen-Thueringen Girozentrale LOC) (A-1+/VMIG1)
3,100,000 3.55 01/07/98 3,100,000
New York State Local Government Assistance Corp. VRDN Series 1995 F
(Toronto Dominion Bank LOC) (A-1+/VMIG1)
1,000,000 3.50 01/07/98 1,000,000
- -----------------------------------------------------------------------------------------------
$ 97,220,077
- -----------------------------------------------------------------------------------------------
NORTH CAROLINA--2.6%
North Carolina Medical Care Community RB for Moses H. Cone Memorial
Hospital Project Series 1993 (A-1+)
$ 5,000,000 4.15% 01/07/98 $ 5,000,000
Person County PCRB for Carolina Power & Light Series 1992 A (A-1/P-1)
16,400,000 3.90 01/07/98 16,400,000
Rockingham County IDA PCRB for Philip Morris Company Series 1992 (VMIG1)
7,700,000 4.00 01/07/98 7,700,000
- -----------------------------------------------------------------------------------------------
$ 29,100,000
- -----------------------------------------------------------------------------------------------
OHIO--1.2%
Columbus Electric System Series 1984 RB (Union Bank of Switzerland LOC)
(VMIG1)
$11,500,000 3.70% 01/07/98 $ 11,500,000
Franklin County Hospital RB for Holy Cross Health System Series 1995 (A-
1+/VMIG1)
1,400,000 4.15 01/07/98 1,400,000
- -----------------------------------------------------------------------------------------------
$ 12,900,000
- -----------------------------------------------------------------------------------------------
PENNSYLVANIA--3.7%
Delaware County IDA PCRB For BP Oil Inc. Project Series 1985 (A-1+/P-1)
$ 6,600,000 4.90% 01/02/98 $ 6,600,000
</TABLE>
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
19
<PAGE>
Statement of Investments
- --------------------------------------------------------------------------------
FINANCIAL SQUARE TAX-FREE MONEY MARKET FUND (continued)
December 31, 1997
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
PENNSYLVANIA (CONTINUED)
Pennsylvania GO Bond Eagle Tax Exempt Trust Class A COPS First Series 1994
(AMBAC) (A-1+C)
$13,000,000 4.27% 01/07/98 $ 13,000,000
Pennsylvania TRANS Series 1997-1998 (SP-1+/MIG1)
18,000,000 4.50 06/30/98 18,064,102
Philadelphia School District TRANS Series 1997- 98 (Commerzbank) (SP-
1+/MIG1)
4,000,000 4.50 06/30/98 4,011,899
- -----------------------------------------------------------------------------------------------
$ 41,676,001
- -----------------------------------------------------------------------------------------------
SOUTH CAROLINA--0.8%
York County Floating/Fixed Rate PCRB Pooled Series 1984-North Carolina
Electric Membership Corp. VRDN (CFC) (A-1+/VMIG1)
$ 8,675,000 3.85% 01/07/98 $ 8,675,000
- -----------------------------------------------------------------------------------------------
TENNESSEE--0.2%
Blount County PCRB for Aluminum Company of America Series 1992 (A-1)
$ 2,450,000 4.25% 01/07/98 $ 2,450,000
- -----------------------------------------------------------------------------------------------
TEXAS--18.6%
Coastal Bend Health Facilities Development Corp. RB Series 1997 (First
National Bank of Chicago) (VMIG1)
$ 1,000,000 4.15% 01/07/98 $ 1,000,000
Gulf Coast Waste Disposal Authority PCRB for Monsanto Series 1996 (P-1)
5,300,000 3.80 01/07/98 5,300,000
Harris County Health Facilities Development Corp. RB for St. Luke's
Episcopal Hospital Series 1997 B (A-1+)
16,300,000 5.00 01/02/98 16,300,000
Harris County Health Facilities Development Corp. RB For Methodist
Hospital Series 1994 (A-1+)
31,500,000 4.90 01/02/98 31,500,000
Harris County Health Facilities Development Corp. Series 1997 A
(A-1+C/VMIG1)
9,000,000 3.70 03/13/98 9,000,000
Harris County Hospital RB for Childrens Hospital Series 1989 B-2 (VMIG1)
5,000,000 3.70 01/07/98 5,000,000
Houston GO CP Notes Series A (A-1+/P-1)
15,000,000 3.75 05/13/98 15,000,000
Lower Colorado River Authority CP Notes Series B (A-1+/P-1)
7,000,000 3.80 04/07/98 7,000,000
10,400,000 3.75 05/15/98 10,400,000
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
San Antonio Electric & Gas System Revenue & Refunding Bonds New Series
1997 SG 104 & SG 105 (AA/A-1)
$17,000,000 4.25% 01/07/98 $ 17,000,000
San Antonio Electric & Gas Systems CP Notes Series A (A-1+/P-1)
10,000,000 3.75 01/15/98 10,000,000
9,900,000 3.70 04/16/98 9,900,000
10,000,000 3.75 05/26/98 10,000,000
State of Texas TRANS Series 1997 B (A-1+/P-1)
5,000,000 3.70 02/25/98 5,000,000
State of Texas TRANS Series 1997 A (SP-1+/MIG1)
44,310,000 4.75 08/31/98 44,571,573
Travis County Health Facilities Development Variable Rate RB For Charity
Obligation Group Series 1997 E (A-1+/VMIG1)
6,900,000 3.65 01/07/98 6,900,000
Waco Health Facilities Development Co. Variable Rate RB For Charity
Obligation Group Series 1997 E (A-1+/VMIG1)
5,000,000 3.65 01/07/98 5,000,000
- -----------------------------------------------------------------------------------------------
$ 208,871,573
- -----------------------------------------------------------------------------------------------
VIRGINIA--4.7%
Chesterfield County IDA PCRB for Philip Morris Companies, Inc. Series 1992
(A-1/P-1)
$14,700,000 4.00% 01/07/98 $ 14,700,000
Louisa PCRB for Virginia Electric & Power Series 1984 (A-1/VMIG1)
4,000,000 3.85 03/13/98 4,000,000
3,900,000 3.85 03/18/98 3,900,000
4,000,000 3.85 03/31/98 4,000,000
2,000,000 3.85 03/24/98 2,000,000
Richmond VRDN Public Utility Revenue Notes Series A (A-1/VMIG1)
10,000,000 4.20 01/07/98 10,000,000
Roanoke City IDA VRDN for Carilion Health Systems Hospital Series A
(A-1/VMIG1)
4,000,000 4.10 01/07/98 4,000,000
Roanoke City IDA VRDN for Carilion Health Systems Series B (A-1+/VMIG1)
1,000,000 4.10 01/07/98 1,000,000
York County IDA PCRB for Virginia Electric & Power Series 1985
(A-1+/VMIG1)
9,000,000 3.90 02/09/98 9,000,000
- -----------------------------------------------------------------------------------------------
$ 52,600,000
- -----------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
WASHINGTON--3.4%
King County Sewer Revenue BANS Series A (A-1/P-1)
$10,000,000 3.75% 04/15/98 $ 10,000,000
4,600,000 3.75 04/16/98 4,600,000
Washington Health Care Facilities Authority Series 1985 B
(A-1+/VMIG1)
5,110,000 5.00 01/02/98 5,110,000
Washington Health Care Facilities Authority Series 1985 D
(A-1+/VMIG1)
3,100,000 5.00 01/02/98 3,100,000
Washington Health Care Facilities Authority Series 1985 E
(A-1+/VMIG1)
4,200,000 5.00 01/02/98 4,200,000
Washington Health Care Facilities Authority VRDN for Fred Hutchinson
Cancer Research Center Series 1991 A (Morgan Guaranty Trust LOC)
(VMIG1)
5,225,000 5.10 01/02/98 5,225,000
Washington Health Care Facilities Authority VRDN for Fred Hutchinson
Cancer Research Center Series 1996 (Morgan Guaranty Trust LOC) (VMIG1)
5,595,000 5.10 01/02/98 5,595,000
- ---------------------------------------------------------------------------------------------
$ 37,830,000
- ---------------------------------------------------------------------------------------------
WISCONSIN--2.8%
Milwaukee IDRB Multi-Modal for Pharmacia & Upjohn, Inc. Series 1994 (P-
1)
$ 8,000,000 4.20% 01/07/98 $ 8,000,000
State of Wisconsin Operating Notes Series 1997 (SP-1+/MIG1)
6,800,000 4.50 06/15/98 6,820,592
State of Wisconsin Operating Notes Series 1997-2 (SP-1+/MIG1)
10,000,000 4.50 06/15/98 10,033,691
Wisconsin Health & Educational Facilities Authority Variable Rate RB
for Wheaton Franciscan Services Series 1997 (Toronto Dominion Bank)
(A-1+/VMIG1)
6,575,000 4.10 01/07/98 6,575,000
- ---------------------------------------------------------------------------------------------
$ 31,429,283
- ---------------------------------------------------------------------------------------------
WYOMING--0.1%
Sweetwater PCRB for Pacificorp Project Series 1990 A (C.S. First Boston
LOC) (VMIG1)
$ 1,500,000 3.65% 01/07/98 $ 1,500,000
- ---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $1,188,671,470(a)
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
</TABLE>
(a) The amount stated also represents aggregate cost for federal income tax
purposes.
Interest rates represent either the stated coupon rate, annualized yield on
date of purchase for discounted notes, or, for floating rate securities, the
current reset rate, which is based upon current interest rate indices.
Maturity dates represent either the stated date on the security, the next
interest reset date for floating rate securities, or the prerefunded date for
those types of securities.
Security ratings are unaudited.
The percentages shown for each investment category reflect the value of
investments in that category as a percentage of total net assets.
INVESTMENT ABBREVIATIONS:
<TABLE>
<C> <S>
ACES --Adjustable Convertible Extendible Securities
AMBAC --Insured by American Municipal Bond Assurance Corp.
BANS --Bond Anticipation Note
CFC --Unconditionally Guaranteed by CFC, Cooperative Finance Corp.
COPS --Certificates of Participation
CP --Commercial Paper
FGIC --Insured by Financial Guaranty Insurance Co.
GO --General Obligation
IDA --Industrial Development Authority
IDB --Industrial Development Bond
IDRB --Industrial Development Revenue Bond
LOC --Letter of Credit
MBIA --Insured by Municipal Bond Investors Assurance
MF Hsg. --Multi-Family Housing
PCRB --Pollution Control Revenue Bond
RANS --Revenue Anticipation Notes
RB --Revenue Bond
TRANS --Tax Revenue Anticipation Notes
VRDN --Variable Rate Demand Note
</TABLE>
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
21
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME PREMIUM
OBLIGATIONS MONEY MARKET MONEY MARKET
FUND FUND FUND
--------------------------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at
value based on amortized cost $4,469,716,189 $5,077,628,672 $226,904,703
Cash 724,728 -- 70,643
Interest receivable 26,750,497 33,332,928 391,533
Deferred organization expenses,
net -- 12,432 --
Other assets 5,061 293,555 64,141
- ------------------------------------------------------------------------------
TOTAL ASSETS 4,497,196,475 5,111,267,587 227,431,020
- ------------------------------------------------------------------------------
LIABILITIES:
Payable for investment securities
purchased 35,000,000 177,216,947 4,999,518
Due to bank -- 90,617 --
Dividends payable 22,829,936 28,027,343 1,308,135
Accrued expenses and other
liabilities 1,120,150 1,595,937 102,078
- ------------------------------------------------------------------------------
TOTAL LIABILITIES 58,950,086 206,930,844 6,409,731
- ------------------------------------------------------------------------------
NET ASSETS:
Paid in capital 4,438,254,520 4,904,335,361 221,021,289
Accumulated undistributed net
investment income -- -- --
Accumulated undistributed net
realized gain (loss) on
investments (8,131) 1,382 --
- ------------------------------------------------------------------------------
NET ASSETS $4,438,246,389 $4,904,336,743 $221,021,289
- ------------------------------------------------------------------------------
Net asset value, offering and
redemption price per share
(net assets/shares outstanding) $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------
SHARES OUTSTANDING:
FST shares 3,867,740,474 4,346,515,706 218,192,392
FST Preferred shares 152,770,028 20,258,602 557,827
FST Administration shares 241,610,519 221,253,373 1,456,698
FST Service shares 176,133,499 316,307,680 814,372
- ------------------------------------------------------------------------------
Total shares of beneficial
interest outstanding, $0.001 par
value (unlimited number of
shares authorized) 4,438,254,520 4,904,335,361 221,021,289
- ------------------------------------------------------------------------------
</TABLE>
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
22
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY TREASURY TAX-FREE
OBLIGATIONS INSTRUMENTS GOVERNMENT FEDERAL MONEY MARKET
FUND FUND FUND FUND FUND
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$3,522,502,423 $516,935,549 $2,404,187,810 $2,229,360,388 $1,188,671,470
14,370 70,699 69,034 51,898 491,011
10,248,818 5,333,790 9,708,940 3,566,555 7,168,593
-- -- -- -- 24,080
-- -- 313,847 399 117,318
- ---------------------------------------------------------------------------
3,532,765,611 522,340,038 2,414,279,631 2,232,979,240 1,196,472,472
- ---------------------------------------------------------------------------
-- -- 35,917,844 50,000,000 72,470,257
-- -- -- -- --
16,541,636 1,395,025 11,581,411 8,197,468 3,439,031
1,069,932 187,997 1,090,263 944,335 377,021
- ---------------------------------------------------------------------------
17,611,568 1,583,022 48,589,518 59,141,803 76,286,309
- ---------------------------------------------------------------------------
3,515,154,043 520,755,638 2,365,690,113 2,173,836,797 1,120,201,103
-- -- -- 8,313 --
-- 1,378 -- (7,673) (14,940)
- ---------------------------------------------------------------------------
$3,515,154,043 $520,757,016 $2,365,690,113 $2,173,837,437 $1,120,186,163
- ---------------------------------------------------------------------------
$1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------
2,217,903,808 496,418,745 1,478,535,045 1,125,680,906 939,421,140
245,360,997 1,539 7,146,792 194,374,977 35,151,663
738,895,099 4,159,015 299,801,906 625,333,945 103,049,763
312,994,139 20,176,339 580,206,370 228,446,969 42,578,537
- ---------------------------------------------------------------------------
3,515,154,043 520,755,638 2,365,690,113 2,173,836,797 1,120,201,103
- ---------------------------------------------------------------------------
</TABLE>
---------------------------------------
- ---------------------------------------
23
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME PREMIUM
OBLIGATIONS MONEY MARKET MONEY MARKET
FUND FUND FUND(A)
---------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $288,754,558 $277,371,948 $4,265,812
- --------------------------------------------------------------------------------
EXPENSES:
Management fees 10,499,297 10,006,793 154,238
Custodian fees 660,532 568,180 20,086
Registration fees 144,676 532,913 118,335
Professional fees 105,490 29,237 5,834
Amortization of deferred organization
expenses -- 9,041 --
Trustees' fees 60,895 36,307 590
Other 264,396 109,004 26,895
- --------------------------------------------------------------------------------
TOTAL EXPENSES 11,735,286 11,291,475 325,978
Less--Expenses reimbursable and fees
waived by Goldman Sachs (2,511,530) (2,500,163) (268,308)
- --------------------------------------------------------------------------------
Net expenses 9,223,756 8,791,312 57,670
Preferred share fees 181,303 55,349 131
Administration share fees 662,090 780,489 13,845
Service share fees 707,816 1,514,944 114
- --------------------------------------------------------------------------------
NET EXPENSES AND SHARE FEES 10,774,965 11,142,094 71,760
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 277,979,593 266,229,854 4,194,052
- --------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON INVESTMENT
TRANSACTIONS 15,992 32,849 --
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $277,995,585 $266,262,703 $4,194,052
- --------------------------------------------------------------------------------
</TABLE>
(a) Commencement date of operations for the Premium Money Market, Treasury
Instruments and the Federal Fund was August 1, 1997, March 3, 1997 and
February 28, 1997, respectively.
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
24
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
TREASURY TREASURY TAX-FREE
OBLIGATIONS INSTRUMENTS GOVERNMENT FEDERAL MONEY MARKET
FUND FUND(A) FUND FUND(A) FUND
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$173,797,289 $11,914,704 $117,069,858 $53,521,252 $30,453,737
- ---------------------------------------------------------------------------------
6,427,023 463,681 4,296,324 1,967,724 1,694,448
455,269 39,985 318,894 114,477 33,896
202,135 123,596 340,455 514,252 160,249
46,344 7,077 17,117 12,440 13,000
-- -- -- -- 15,582
24,127 1,430 11,181 4,810 4,383
164,848 18,108 39,432 22,210 27,076
- ---------------------------------------------------------------------------------
7,319,746 653,877 5,023,403 2,635,913 1,948,634
(1,671,542) (242,977) (1,246,079) (911,622) (455,966)
- ---------------------------------------------------------------------------------
5,648,204 410,900 3,777,324 1,724,291 1,492,668
107,309 1 27,961 66,047 15,965
1,741,440 3,240 649,313 353,083 241,784
1,201,356 112,501 2,533,854 482,096 166,974
- ---------------------------------------------------------------------------------
8,698,309 526,642 6,988,452 2,625,517 1,917,391
- ---------------------------------------------------------------------------------
165,098,980 11,388,062 110,081,406 50,895,735 28,536,346
- ---------------------------------------------------------------------------------
300,712 89,851 127,727 (7,673) (2,081)
- ---------------------------------------------------------------------------------
$165,399,692 $11,477,913 $110,209,133 $50,888,062 $28,534,265
- ---------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME PREMIUM
OBLIGATIONS MONEY MARKET MONEY MARKET
FUND FUND FUND(A)
--------------------------------------------------
<S> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 277,979,593 $ 266,229,854 $ 4,194,052
Net realized gain (loss) on
investment transactions 15,992 32,849 0
- --------------------------------------------------------------------------------
Net increase in net as-
sets resulting from op-
erations 277,995,585 266,262,703 4,194,052
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLD-
ERS FROM:
Net investment income
FST shares (247,361,553) (231,700,902) (3,890,656)
FST Preferred shares (9,751,263) (3,010,280) (7,210)
FST Administration shares (13,824,313) (16,410,842) (295,011)
FST Service shares (7,042,464) (15,107,830) (1,175)
Net realized gain on in-
vestment transactions
FST shares (22,695) (24,966) --
FST Preferred shares (752) (571) --
FST Administration shares (1,302) (31) --
FST Service shares (464) (6,853) --
- --------------------------------------------------------------------------------
Total distributions to
shareholders (278,004,806) (266,262,275) (4,194,052)
- --------------------------------------------------------------------------------
FROM SHARE TRANSACTIONS (AT
$1.00 PER SHARE):
Proceeds from sales of
shares 53,179,415,600 68,053,947,094 1,075,863,230
Reinvestment of dividends
and distributions 112,453,328 134,114,443 1,495,718
Cost of shares repurchased (53,213,589,524) (66,241,742,997) (856,337,659)
- --------------------------------------------------------------------------------
Net increase in net as-
sets resulting from
share
transactions 78,279,404 1,946,318,540 221,021,289
- --------------------------------------------------------------------------------
Total increase 78,270,183 1,946,318,968 221,021,289
NET ASSETS:
Beginning of period 4,359,976,206 2,958,017,775 --
- --------------------------------------------------------------------------------
End of period $ 4,438,246,389 $ 4,904,336,743 $ 221,021,289
- --------------------------------------------------------------------------------
Accumulated undistributed
net investment income -- -- --
- --------------------------------------------------------------------------------
</TABLE>
(a) Commencement date of operations for the Premium Money Market, Treasury
Instruments and the Federal Fund was August 1, 1997, March 3, 1997 and
February 28, 1997, respectively.
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
26
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
TREASURY TREASURY TAX-FREE
OBLIGATIONS INSTRUMENTS GOVERNMENT FEDERAL MONEY MARKET
FUND FUND(A) FUND FUND(A) FUND
- ---------------------------------------------------------------------------------------
$ 165,098,980 $ 11,388,062 $ 110,081,406 $ 50,895,735 $ 28,536,346
300,712 89,851 127,727 (7,673) (2,081)
- ---------------------------------------------------------------------------------------
165,399,692 11,477,913 110,209,133 50,888,062 28,534,265
- ---------------------------------------------------------------------------------------
(112,020,839) (10,293,085) (70,362,803) (35,377,629) (23,828,347)
(5,711,597) (45) (1,492,230) (3,504,242) (542,008)
(35,669,978) (62,666) (13,365,067) (7,278,709) (3,161,663)
(11,696,566) (1,032,266) (24,861,306) (4,726,842) (1,004,328)
(253,465) (78,370) (94,763) -- --
(9,681) (1) (1,310) -- --
(92,228) (459) (15,668) -- --
(25,376) (9,643) (42,470) -- --
- ---------------------------------------------------------------------------------------
(165,479,730) (11,476,535) (110,235,617) (50,887,422) (28,536,346)
- ---------------------------------------------------------------------------------------
30,901,418,469 1,886,752,702 20,842,203,467 7,175,698,490 6,856,129,085
61,924,789 3,001,270 30,237,427 17,286,075 8,395,593
(30,543,252,110) (1,368,998,334) (19,734,267,186) (5,019,147,768) (6,285,421,492)
- ---------------------------------------------------------------------------------------
420,091,148 520,755,638 1,138,173,708 2,173,836,797 579,103,186
- ---------------------------------------------------------------------------------------
420,011,110 520,757,016 1,138,147,224 2,173,837,437 579,101,105
3,095,142,933 -- 1,227,542,889 -- 541,085,058
- ---------------------------------------------------------------------------------------
$ 3,515,154,043 $ 520,757,016 $ 2,365,690,113 $ 2,173,837,437 $ 1,120,186,163
- ---------------------------------------------------------------------------------------
-- -- -- 8,313 --
- ---------------------------------------------------------------------------------------
</TABLE>
---------------------------------------
- ---------------------------------------
27
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME TREASURY TAX-FREE
OBLIGATIONS MONEY MARKET OBLIGATIONS GOVERNMENT MONEY MARKET
FUND FUND FUND FUND FUND
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 263,491,381 $ 162,277,598 $ 124,545,016 $ 65,841,904 $ 18,529,517
Net realized gain (loss)
on
investment transactions 105,304 189,110 587,091 136,538 (5,995)
- -----------------------------------------------------------------------------------------------------------------
Net increase in net as-
sets resulting
from operations 263,596,685 162,466,708 125,132,107 65,978,442 18,523,522
---------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARE-
HOLDERS FROM:
Net investment income
FST shares (245,389,523) (149,928,272) (93,857,124) (48,867,861) (15,981,710)
FST Preferred shares (2,239,677) (162,278) (797,088) (19,753) (431,737)
FST Administration
shares (10,697,750) (9,558,151) (21,870,105) (5,023,737) (1,593,538)
FST Service shares (5,164,431) (2,628,897) (8,020,699) (11,930,553) (522,532)
Net realized gain on
investment transactions
FST shares (128,847) (173,838) (385,734) (81,682) --
FST Preferred shares (1,177) (188) (3,276) (33) --
FST Administration
shares (5,617) (11,082) (89,882) (8,397) --
FST Service shares (2,712) (3,048) (32,963) (19,942) --
----------------------------------------------------------------------------------------------------------------
Total distributions to
shareholders (263,629,734) (162,465,754) (125,056,871) (65,951,958) (18,529,517)
---------------------------------------------------------------------------------------------------------------
FROM SHARE TRANSACTIONS
(AT $1.00 PER SHARE):
Proceeds from sales of
shares 48,481,127,400 44,257,102,764 20,383,057,696 14,111,648,633 4,669,259,507
Reinvestment of
dividends and
distributions 126,514,648 91,077,089 45,060,831 21,912,928 6,495,873
Cost of shares repur-
chased (47,756,596,271) (43,600,991,427) (19,343,068,853) (13,746,823,336) (4,623,830,243)
- -----------------------------------------------------------------------------------------------------------------
Net increase in net
assets resulting
from share
transactions 851,045,777 747,188,426 1,085,049,674 386,738,225 51,925,137
---------------------------------------------------------------------------------------------------------------
Total increase 851,012,728 747,189,380 1,085,124,910 386,764,709 51,919,142
NET ASSETS:
Beginning of year 3,508,963,478 2,210,828,395 2,010,018,023 840,778,180 489,165,916
- -----------------------------------------------------------------------------------------------------------------
End of year $ 4,359,976,206 $ 2,958,017,775 $ 3,095,142,933 $ 1,227,542,889 $ 541,085,058
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------- ---------------------------------------
The accompanying notes are an integral
part of these financial statements.
28
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------- ---------------------------------------
1. ORGANIZATION
Effective May 1, 1997, the Goldman Sachs Money Market Trust was reorganized
from a Massachusetts business trust to a Delaware business trust named the
Goldman Sachs Trust (the "Trust"). The Trust includes the Financial Square
Funds, collectively "the Funds" or individually a "Fund". The Trust is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. Financial Square consists of nine diversified
funds: Prime Obligations, Money Market, Premium Money Market, Treasury
Obligations, Treasury Instruments, Government, Federal, Tax-Free Money Market,
Municipal Money Market (inactive as of December 31, 1997). The Financial Square
Funds offer four classes of shares: FST shares, FST Preferred shares, FST
Administration shares and FST Service shares. The investment objective of the
Funds is to maximize current income to the extent consistent with the
preservation of capital and maintenance of liquidity.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that may affect the reported amounts.
A. Investment Valuation--
Each Fund uses the amortized-cost method for valuing portfolio securities which
approximates market value. Under this method, all investments purchased at a
discount or premium are valued by amortizing the difference between the
original purchase price and maturity value of the issue over the period to
maturity.
B. Interest Income--
Interest income is determined on the basis of interest accrued, premium
amortized and discount earned.
C. Federal Taxes--
It is each Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
each year substantially all investment company taxable and tax-exempt income to
shareholders. Accordingly, no federal tax provisions are required.
The characterization of distributions to shareholders for financial reporting
purposes is determined in accordance with federal income tax rules. Therefore,
the source of the Funds' distributions may be shown in the accompanying
financial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital,
depending on the type of book/tax differences that may exist.
At December 31, 1997, the Funds' tax year end, the following funds had capital
loss carryforwards for U.S. Federal tax purposes of approximately:
<TABLE>
<CAPTION>
Years of
Fund Amount Expiration
---- ------ ----------
<S> <C> <C>
Federal...................................................... $7,673 2005
Tax-Free Money Market........................................ 14,940 2003-2005
</TABLE>
D. Deferred Organization Expenses--
Organization-related costs are being amortized on a straight-line basis over a
period of five years.
E. Expenses--
Expenses incurred by the Funds that do not specifically relate to an individual
fund are generally allocated to the Funds based on each Fund's relative average
net assets for the period.
Shareholders of FST Preferred, FST Administration and FST Service shares bear
all expenses and fees paid to service organizations for their services with
respect to such shares.
---------------------------------------
- ---------------------------------------
29
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1997
- --------------------------------------- ---------------------------------------
3. AGREEMENTS
As of May 1, 1997, the Fund's Investment Advisory and Administration Agreements
were combined into an Investment Management Agreement (the "Agreement")
encompassing the same services and fee structure. Goldman Sachs Asset
Management ("GSAM"), a separate operating division of Goldman, Sachs & Co.
("Goldman Sachs"), manages the portfolios of the Funds, subject to general
supervision by the Trust's Board of Trustees and administers each Fund's
business affairs, including providing facilities. As compensation for the
services rendered under the Investment Management Agreement and the assumption
of the expenses related thereto, GSAM is entitled to a fee, computed daily and
payable monthly, at an annual rate equal to .205% of each Fund's average daily
net assets. These amounts are included in "Accrued expenses and other
liabilities" in the accompanying Statements of Assets and Liabilities.
For the year ended December 31, 1997, GSAM has voluntarily agreed to waive a
portion of its management fee. In addition, GSAM has limited certain of each of
the Fund's expenses (excluding management fees, service organization fees,
taxes, interest, brokerage commissions and extraordinary expenses) to the
extent that such expenses exceed .01% per annum of the Fund's average daily net
assets. These reimbursement amounts are included in "Other assets" in the
accompanying Statement of Assets and Liabilities.
Goldman Sachs serves as Transfer Agent and Distributor of shares of the Funds
pursuant to Transfer Agent and Distribution Agreements and receives no fee.
The following chart outlines the fee waivers and expense reimbursements for
the year ended December 31, 1997 and amounts owed to and due from GSAM at
December 31, 1997 (in thousands):
<TABLE>
<CAPTION>
Amounts
Management Expense Amounts due
Fees Reimburse- due to from
Fund Waived ments Total GSAM GSAM
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Prime
Obligations
Fund $1,793 $719 $2,512 $852 --
- -------------------------------------------------------------
Money
Market Fund 1,708 792 2,500 863 $287
- -------------------------------------------------------------
Premium Money
Market Fund 104 164 268 21 64
- -------------------------------------------------------------
Treasury
Obligations
Fund 1,098 574 1,672 530 --
- -------------------------------------------------------------
Treasury
Instruments
Fund 80 163 243 105 --
- -------------------------------------------------------------
Government Fund 733 513 1,246 366 314
- -------------------------------------------------------------
Federal Fund 345 567 912 284 --
- -------------------------------------------------------------
Tax-Free Money
Market Fund 289 167 456 165 116
</TABLE>
4. PREFERRED, ADMINISTRATION AND SERVICE PLANS
The Funds have adopted Preferred, Administration and Service Plans to
compensate service organizations for providing varying levels of account
administration and shareholder liaison services to their customers who are
beneficial owners of such shares. The Preferred, Administration and Service
Plans provide for compensation to the service organizations in an amount up to
.10%, .25% and .50% (on an annualized basis), respectively, of the average
daily net asset value of the respective shares.
5.LINE OF CREDIT FACILITY
The Funds participate in a $250,000,000 uncommitted, unsecured revolving line
of credit facility to be used
---------------------------------------
- ---------------------------------------
30
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------- ---------------------------------------
solely for temporary or emergency purposes. Under the most restrictive
arrangement, each Fund must own securities having a market value in excess of
300% of the total bank borrowings. The interest rate on the borrowings is based
on the Federal Funds rate. During the year ended December 31, 1997, the Funds
did not have any borrowings under this facility.
6.REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying
securities, including accrued interest, is required to equal or exceed the
value of the repurchase agreement. The underlying securities for all repurchase
agreements are held in safekeeping at a custodian.
7.JOINT REPURCHASE AGREEMENT ACCOUNTS
The Funds, together with other registered investment companies having
management agreements with GSAM or its affiliates, transfer uninvested cash
balances into joint accounts, the daily aggregate balances of which are
invested in one or more repurchase agreements. The underlying securities for
the repurchase agreements are U.S. Treasury obligations.
At December 31, 1997, the Prime Obligations, Money Market, Premium Money
Market, Treasury Obligations and Government Funds had undivided interests in
the repurchase agreements in the following joint account, which equaled
$404,500,000, $389,700,000, $66,900,000, $1,024,200,000 and $336,400,000 in
principal amount, respectively. At December 31, 1997, the repurchase agreements
in this joint account, along with the corresponding underlying securities
(including the type of security, market value, interest rate and maturity
date), were as follows:
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS
Chase Manhattan Securities, dated 12/31/97, repurchase price $200,061,111
(total collateral value $204,001,955 consisting of U.S. Treasury Notes:
5.50%-8.75%, 02/15/00-08/31/00)
$200,000,000 5.50% 01/02/98 $200,000,000
Donaldson, Lufkin & Jenrette, Inc., dated 12/31/97, repurchase price
$510,185,583 (total collateral value $520,200,021 consisting of U.S. Trea-
sury Notes: 5.13%-8.13%, 01/31/98-02/15/04; U.S. Treasury Interest only
Stripped Securities: 02/15/98-02/15/04; U.S. Treasury Stripped Principal
Security: 08/15/01; U.S. Treasury Bill: 05/14/98)
510,000,000 6.55 01/02/98 510,000,000
Swiss Bank Corp., dated 12/31/97, repurchase price $735,367,495 (total col-
lateral value $749,834,669 consisting of U.S. Treasury Notes: 4.75%-8.50%,
02/15/98-11/15/05; U.S. Treasury Inflation Indexed Bond: 3.38%, 01/15/07;
U.S. Treasury Bills: 01/15/98-10/15/98; U.S. Treasury Bonds: 10.75%-11.13%,
08/15/03-08/15/05)
735,100,000 6.55 01/02/98 735,100,000
Swiss Bank Corp., dated 12/31/97, repurchase price $300,091,667 (total col-
lateral value $306,013,333 consisting of U.S. Treasury Notes: 4.75%-8.50%,
02/15/98-11/15/05; U.S. Treasury Inflation Indexed Bond: 3.38%, 01/15/07;
U.S. Treasury Bills: 01/15/98-10/15/98; U.S. Treasury Bonds: 10.75%-11.13%,
08/15/03-08/15/05)
300,000,000 5.50 01/02/98 300,000,000
Salomon-Smith Barney, Inc., dated 12/31/97, repurchase price $1,000,369,444
(total collateral value $1,020,528,930 consisting of U.S. Treasury Stripped
Interest Only Securities: 02/15/98-11/15/04; U.S. Treasury Stripped Princi-
pal Only Securities: 5.75%-11.63%, 02/15/98-11/15/04; U.S. Treasury Bill:
10/15/98)
1,000,000,000 6.65 01/02/98 1,000,000,000
- -------------------------------------------------------------------------------------------------
Total Joint Repurchase Agreement Account $2,745,100,000
- -------------------------------------------------------------------------------------------------
</TABLE>
8.OTHER MATTERS
Pursuant to an SEC exemptive order, certain of the Funds may enter into certain
principal transactions, including repurchase agreements, with Goldman, Sachs &
Co. subject to certain limitations as follows: 25% of eligible security
transactions, as defined, and 10% of repurchase agreement transactions.
---------------------------------------
- ---------------------------------------
31
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1997
- --------------------------------------------------------------------------------
9. SUMMARY OF SHARE TRANSACTIONS
Share activity for the year ended December 31, 1997 is as follows:
<TABLE>
<CAPTION>
PRIME PREMIUM
OBLIGATIONS MONEY MARKET MONEY MARKET
FUND FUND FUND(A)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
FST SHARES:
Shares sold 47,147,215,061 63,982,789,001 1,031,854,202
Reinvestment of dividends
and distributions 103,377,234 118,914,805 1,491,071
Shares repurchased (47,284,643,891) (62,295,549,107) (815,152,881)
- ------------------------------------------------------------------------------
(34,051,596) 1,806,154,699 218,192,392
- ------------------------------------------------------------------------------
FST PREFERRED SHARES:
Shares sold 1,624,299,212 754,498,086 553,233
Reinvestment of dividends
and distributions 1,010,173 1,861,300 4,594
Shares repurchased (1,599,668,091) (753,611,334) 0
- ------------------------------------------------------------------------------
25,641,294 2,748,052 557,827
- ------------------------------------------------------------------------------
FST ADMINISTRATION SHARES:
Shares sold 2,052,177,068 2,237,080,367 42,641,449
Reinvestment of dividends
and distributions 4,016,672 11,388,582 27
Shares repurchased (2,030,483,474) (2,192,980,303) (41,184,778)
- ------------------------------------------------------------------------------
25,710,266 55,488,646 1,456,698
- ------------------------------------------------------------------------------
FST SERVICE SHARES:
Shares sold 2,355,724,259 1,079,579,640 814,346
Reinvestment of dividends
and distributions 4,049,249 1,949,756 26
Shares repurchased (2,298,794,068) (999,602,253) 0
- ------------------------------------------------------------------------------
60,979,440 81,927,143 814,372
- ------------------------------------------------------------------------------
Net increase in shares 78,279,404 1,946,318,540 221,021,289
- ------------------------------------------------------------------------------
</TABLE>
(a) Commencement date of operations for the Premium Money Market, Treasury
Instruments and the Federal Fund was August 1, 1997, March 3, 1997 and
February 28, 1997, respectively.
- --------------------------------------- ---------------------------------------
32
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY TREASURY TAX-FREE
OBLIGATIONS INSTRUMENTS GOVERNMENT FEDERAL MONEY MARKET
FUND FUND(A) FUND FUND(A) FUND
<S> <C> <C> <C> <C>
21,293,469,586 1,757,063,242 16,068,538,976 4,332,722,729 6,019,992,055
39,794,793 2,990,503 25,573,363 11,815,388 6,844,739
(21,406,328,023) (1,263,635,000) (15,474,321,199) (3,218,857,211) (5,528,265,772)
- -----------------------------------------------------------------------------------
(73,063,644) 496,418,745 619,791,140 1,125,680,906 498,571,022
- -----------------------------------------------------------------------------------
1,389,183,384 1,500 141,301,549 300,365,996 271,642,865
1,089,957 39 164,952 2,470,479 87,192
(1,191,548,937) 0 (134,432,139) (108,461,498) (265,308,952)
- -----------------------------------------------------------------------------------
198,724,404 1,539 7,034,362 194,374,977 6,421,105
- -----------------------------------------------------------------------------------
5,271,440,356 9,051,015 2,286,537,497 1,298,319,389 271,268,796
12,077,349 5,093 2,533,048 1,136,485 865,271
(5,081,525,991) (4,897,093) (2,134,371,808) (674,121,929) (220,746,099)
- -----------------------------------------------------------------------------------
201,991,714 4,159,015 154,698,737 625,333,945 51,387,968
- -----------------------------------------------------------------------------------
2,947,325,143 120,636,945 2,345,825,445 1,244,406,778 293,225,369
8,962,690 5,635 1,966,064 1,747,321 598,391
(2,863,849,159) (100,466,241) (1,991,142,040) (1,017,707,130) (271,100,669)
- -----------------------------------------------------------------------------------
92,438,674 20,176,339 356,649,469 228,446,969 22,723,091
- -----------------------------------------------------------------------------------
420,091,148 520,755,638 1,138,173,708 2,173,836,797 579,103,186
- -----------------------------------------------------------------------------------
</TABLE>
- --------------------------------------- ---------------------------------------
33
<PAGE>
- --------------------------------------------------------------------------------
Goldman Sachs Trust--Financial Square Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1997
- --------------------------------------------------------------------------------
Share activity for the year ended December 31, 1996 is as follows:
<TABLE>
<CAPTION>
TAX-FREE
PRIME OBLIGATIONS MONEY MARKET TREASURY GOVERNMENT MONEY MARKET
FUND FUND OBLIGATIONS FUND FUND FUND
FST SHARES:
<S> <C> <C> <C> <C> <C>
Shares sold 44,941,258,260 41,611,799,874 15,303,462,361 11,674,849,553 4,186,677,890
Reinvestment of
dividends and
distributions 120,569,689 84,724,371 33,617,264 19,640,980 4,879,667
Shares repurchased (44,455,790,432) (41,225,360,339) (14,633,812,470) (11,579,631,835) (4,199,081,918)
- ---------------------------------------------------------------------------------------------------------------
606,037,517 471,163,906 703,267,155 114,858,698 (7,524,361)
- ---------------------------------------------------------------------------------------------------------------
FST PREFERRED SHARES:
Shares sold 377,996,154 77,361,171 94,309,002 8,202,329 65,543,581
Reinvestment of
dividends and
distributions 6,257 76,227 473,231 7,480 322,508
Shares repurchased (250,873,677) (59,926,848) (48,145,640) (8,097,379) (37,135,531)
- ---------------------------------------------------------------------------------------------------------------
127,128,734 17,510,550 46,636,593 112,430 28,730,558
- ---------------------------------------------------------------------------------------------------------------
FST ADMINISTRATION
SHARES:
Shares sold 1,718,885,581 2,097,089,351 2,868,056,191 1,074,614,378 177,906,627
Reinvestment of
dividends and
distributions 2,721,453 5,879,304 4,640,302 1,055,828 844,377
Shares repurchased (1,653,602,695) (2,074,616,324) (2,618,986,546) (1,012,951,862) (148,027,716)
- ---------------------------------------------------------------------------------------------------------------
68,004,339 28,352,331 253,709,947 62,718,344 30,723,288
- ---------------------------------------------------------------------------------------------------------------
FST SERVICE SHARES:
Shares sold 1,442,987,405 470,852,368 2,117,230,142 1,353,982,373 239,131,409
Reinvestment of
dividends and
distributions 3,217,249 397,187 6,330,034 1,208,640 449,321
Shares repurchased (1,396,329,467) (241,087,916) (2,042,124,197) (1,146,142,260) (239,585,078)
- ---------------------------------------------------------------------------------------------------------------
49,875,187 230,161,639 81,435,979 209,048,753 (4,348)
- ---------------------------------------------------------------------------------------------------------------
Net increase in shares 851,045,777 747,188,426 1,085,049,674 386,738,225 51,925,137
</TABLE>
---------------------------------------
- ---------------------------------------
34
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for a Share Outstanding Throughout Each Period
Prime Obligations Fund
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------
NET ASSET NET REALIZED TOTAL NET ASSET
VALUE AT NET GAIN INCOME FROM DISTRIBUTIONS VALUE AT
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT TO END TOTAL
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS OF PERIOD RETURN(A)
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1997-FST
shares.......... $1.00 $0.0546 $ -- $0.0546 $(0.0546) $1.00 5.60%
1997-FST Pre-
ferred shares... 1.00 0.0538 -- 0.0538 (0.0538) 1.00 5.50
1997-FST Admin-
istration
shares.......... 1.00 0.0522 -- 0.0522 (0.0522) 1.00 5.34
1997-FST Service
shares.......... 1.00 0.0498 -- 0.0498 (0.0498) 1.00 5.08
1996-FST
shares.......... 1.00 0.0529 -- 0.0529 (0.0529) 1.00 5.41
1996-FST Pre-
ferred
Shares (c)...... 1.00 0.0346 -- 0.0346 (0.0346) 1.00 5.28(b)
1996-FST Admin-
istration
shares.......... 1.00 0.0506 -- 0.0506 (0.0506) 1.00 5.14
1996-FST Service
shares.......... 1.00 0.0478 -- 0.0478 (0.0478) 1.00 4.88
1995-FST
shares.......... 1.00 0.0586 -- 0.0586 (0.0586) 1.00 6.02
1995-FST Admin-
istration
shares.......... 1.00 0.0559 -- 0.0559 (0.0559) 1.00 5.75
1995-FST Service
shares.......... 1.00 0.0533 -- 0.0533 (0.0533) 1.00 5.49
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares (d)...... 1.00 0.0401 -- 0.0401 (0.0401) 1.00 4.38(b)
1994-FST Pre-
ferred
Shares (d)...... 1.00 0.0383 -- 0.0383 (0.0383) 1.00 4.12(b)
1994-FST Service
shares (d)...... 1.00 0.0364 -- 0.0364 (0.0364) 1.00 3.86(b)
FOR THE YEARS ENDED JANUARY 31,
- -------------------------------
1994-FST
shares.......... 1.00 0.0311 0.0002 0.0313 (0.0313) 1.00 3.18
1994-FST Admin-
istration
shares.......... 1.00 0.0286 0.0002 0.0288 (0.0288) 1.00 2.92
1994-FST Service
shares.......... 1.00 0.0261 0.0002 0.0263 (0.0263) 1.00 2.66
1993-FST
shares.......... 1.00 0.0360 0.0007 0.0367 (0.0367) 1.00 3.75
1993-FST Admin-
istration
shares (e)...... 1.00 0.0068 0.0001 0.0069 (0.0069) 1.00 3.02(b)
1993-FST Service
shares.......... 1.00 0.0301 0.0007 0.0308 (0.0308) 1.00 3.23
1992-FST
shares.......... 1.00 0.0572 0.0002 0.0574 (0.0574) 1.00 5.99
1992-FST Service
shares (e)...... 1.00 0.0027 -- 0.0027 (0.0027) 1.00 4.10(b)
FOR THE PERIOD MARCH 8, 1990 (F) THROUGH JANUARY 31,
- ----------------------------------------------------
1991-FST
shares.......... 1.00 0.0727 -- .0727 (0.0727) 1.00 8.27(b)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
------------------------
RATIO OF NET NET RATIO OF NET
RATIO OF NET INVESTMENT ASSETS AT RATIO OF INVESTMENT
EXPENSES TO INCOME TO END EXPENSES TO INCOME TO
AVERAGE NET AVERAGE NET OF PERIOD AVERAGE NET AVERAGE NET
ASSETS ASSETS (IN 000'S) ASSETS ASSETS
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1997-FST
shares.......... 0.18% 5.46% $3,867,739 0.23% 5.41%
1997-FST Pre-
ferred shares... 0.28 5.38 152,767 0.33 5.33
1997-FST Admin-
istration
shares.......... 0.43 5.22 241,607 0.48 5.17
1997-FST Service
shares.......... 0.68 4.97 176,133 0.73 4.92
1996-FST
shares.......... 0.18 5.29 3,901,797 0.23 5.24
1996-FST Pre-
ferred
Shares (c)...... 0.28(b) 5.19(b) 127,126 0.33(b) 5.14(b)
1996-FST Admin-
istration
shares.......... 0.43 5.06 215,898 0.48 5.01
1996-FST Service
shares.......... 0.68 4.78 115,114 0.73 4.73
1995-FST
shares.......... 0.18 5.86 3,295,791 0.22 5.82
1995-FST Admin-
istration
shares.......... 0.43 5.59 147,894 0.47 5.55
1995-FST Service
shares.......... 0.68 5.33 65,278 0.72 5.29
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares (d)...... 0.18(b) 4.38(b) 2,774,849 0.24(b) 4.32(b)
1994-FST Pre-
ferred
Shares (d)...... 0.43(b) 4.18(b) 66,113 0.49(b) 4.12(b)
1994-FST Service
shares (d)...... 0.68(b) 3.98(b) 41,372 0.74(b) 3.92(b)
FOR THE YEARS ENDED JANUARY 31,
- -------------------------------
1994-FST
shares.......... 0.17 3.11 1,831,413 0.25 3.03
1994-FST Admin-
istration
shares.......... 0.42 2.86 35,250 0.50 2.78
1994-FST Service
shares.......... 0.67 2.61 14,001 0.75 2.53
1993-FST
shares.......... 0.18 3.60 813,126 0.25 3.53
1993-FST Admin-
istration
shares (e)...... 0.44(b) 2.96(b) 1,124 0.52(b) 2.88(b)
1993-FST Service
shares.......... 0.68 3.01 336 0.75 2.94
1992-FST
shares.......... 0.18 5.72 917,073 0.27 5.63
1992-FST Service
shares (e)...... 0.66(b) 4.10(b) 118 0.74(b) 4.02(b)
FOR THE PERIOD MARCH 8, 1990 (F) THROUGH JANUARY 31,
- ----------------------------------------------------
1991-FST
shares.......... 0.18(b) 8.04(b) 578,495 0.28(b) 7.94(b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period.
(b) Annualized.
(c) FST Preferred share activity commenced on May 1, 1996.
(d) The information presented reflects eleven months of operations due to a
change in fiscal year end. This change was caused by the reorganization of
the funds as a series of Goldman Sachs Money Market Trust.
(e) FST Administration share and FST Service share activity commenced during
November of 1992 and January 1992, respectively.
(f) Commencement of operations.
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Share Outstanding Throughout Each Period
Money Market Fund
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------
NET ASSET NET REALIZED TOTAL NET ASSET
VALUE AT NET GAIN INCOME FROM DISTRIBUTIONS VALUE AT
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT TO END TOTAL
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS OF PERIOD RETURN(A)
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1997-FST
shares.......... $1.00 $0.0550 $ -- $0.0550 $(0.0550) $1.00 5.63%
1997-FST Pre-
ferred shares... 1.00 0.0544 -- 0.0544 (0.0544) 1.00 5.53
1997-FST Admin-
istration
shares.......... 1.00 0.0526 -- 0.0526 (0.0526) 1.00 5.37
1997-FST Service
shares.......... 1.00 0.0499 -- 0.0499 (0.0499) 1.00 5.11
1996-FST
shares.......... 1.00 0.0533 0.0001 0.0534 (0.0534) 1.00 5.45
1996-FST Pre-
ferred
shares (c)...... 1.00 0.0348 -- 0.0348 (0.0348) 1.00 5.31(b)
1996-FST Admin-
istration
shares.......... 1.00 0.0504 0.0001 0.0505 (0.0505) 1.00 5.19
1996-FST Service
shares.......... 1.00 0.0484 -- 0.0484 (0.0484) 1.00 4.93
1995-FST
Shares.......... 1.00 0.0589 -- 0.0589 (0.0589) 1.00 6.07
1995-FST Admin-
istration
shares.......... 1.00 0.0561 -- 0.0561 (0.0561) 1.00 5.80
1995-FST Service
shares (c)...... 1.00 0.0231 -- 0.0231 (0.0231) 1.00 5.41(b)
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares (c)...... 1.00 0.0305 -- 0.0305 (0.0305) 1.00 4.91(b)
1994-FST Admin-
istration
shares (c)...... 1.00 0.0298 -- 0.0298 (0.0298) 1.00 4.65(b)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
------------------------
RATIO OF NET NET RATIO OF NET
RATIO OF NET INVESTMENT ASSETS AT RATIO OF INVESTMENT
EXPENSES TO INCOME TO END EXPENSES TO INCOME TO
AVERAGE NET AVERAGE NET OF PERIOD AVERAGE NET AVERAGE NET
ASSETS ASSETS (IN 000'S) ASSETS ASSETS
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1997-FST
shares.......... 0.18% 5.50% $4,346,519 0.23% 5.45%
1997-FST Pre-
ferred shares... 0.28 5.44 20,258 0.33 5.39
1997-FST Admin-
istration
shares.......... 0.43 5.26 221,256 0.48 5.21
1997-FST Service
shares.......... 0.68 4.99 316,304 0.73 4.94
1996-FST
shares.......... 0.18 5.33 2,540,366 0.23 5.28
1996-FST Pre-
ferred
shares (c)...... 0.28(b) 5.23(b) 17,510 0.33(b) 5.18(b)
1996-FST Admin-
istration
shares.......... 0.43 5.04 165,766 0.48 4.99
1996-FST Service
shares.......... 0.68 4.84 234,376 0.73 4.79
1995-FST
Shares.......... 0.15 5.89 2,069,197 0.23 5.81
1995-FST Admin-
istration
shares.......... 0.40 5.61 137,412 0.48 5.53
1995-FST Service
shares (c)...... 0.65(b) 4.93(b) 4,219 0.73(b) 4.85(b)
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares (c)...... 0.11(b) 4.88(b) 862,971 0.25(b) 4.74(b)
1994-FST Admin-
istration
shares (c)...... 0.36(b) 4.82(b) 66,560 0.50(b) 4.68(b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period.
(b) Annualized.
(c) FST, FST Administration, FST Service and FST Preferred share activity
commenced May 18, 1994, May 20, 1994, July 14, 1995 and May 1, 1996,
respectively.
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Share Outstanding Throughout Each Period
Premium Money Market Fund
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
---------------------------------
NET ASSET NET REALIZED TOTAL NET ASSET
VALUE AT NET GAIN INCOME FROM DISTRIBUTIONS VALUE AT
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT TO END TOTAL
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS OF PERIOD RETURN(A)
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD AUGUST 1, 1997(C) THROUGH DECEMBER 31,
- -----------------------------------------------------
1997-FST
shares.......... $1.00 $0.0235 $-- $0.0235 $(0.0235) $1.00 5.73%(b)
1997-FST Pre-
ferred Shares... 1.00 0.0228 -- 0.0228 (0.0228) 1.00 5.62 (b)
1997-FST Admin-
istration
shares.......... 1.00 0.0223 -- 0.0223 (0.0223) 1.00 5.47 (b)
1997-FST Service
shares.......... 1.00 0.0217 -- 0.0217 (0.0217) 1.00 5.20 (b)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
-------------------------
NET
RATIO OF NET ASSETS AT RATIO OF NET
RATIO OF NET INVESTMENT END RATIO OF INVESTMENT
EXPENSES TO INCOME TO OF PERIOD EXPENSES TO INCOME TO
AVERAGE NET AVERAGE NET (IN AVERAGE NET AVERAGE NET
ASSETS ASSETS 000'S) ASSETS ASSETS
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE PERIOD AUGUST 1, 1997(C) THROUGH DECEMBER 31,
- -----------------------------------------------------
1997-FST
shares.......... 0.08%(b) 5.59%(b) $218,192 0.43%(b) 5.24%(b)
1997-FST Pre-
ferred Shares... 0.18 (b) 5.50 (b) 558 0.53 (b) 5.15 (b)
1997-FST Admin-
istration
shares.......... 0.33 (b) 5.33 (b) 1,457 0.68 (b) 4.98 (b)
1997-FST Service
shares.......... 0.58 (b) 5.17 (b) 814 0.93 (b) 4.82 (b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period.
(b) Annualized.
(c) Commencement of operations.
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Share Outstanding Throughout Each Period
Treasury Obligations Fund
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------
NET ASSET NET REALIZED TOTAL NET ASSET
VALUE AT NET GAIN (LOSS) INCOME FROM DISTRIBUTIONS VALUE AT
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT TO END TOTAL
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS OF PERIOD RETURN(A)
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1997-FST
shares.......... $1.00 $0.0536 $ 0.0001 $0.0537 $(0.0537) $1.00 5.50%
1997-FST Pre-
ferred shares... 1.00 0.0532 0.0001 0.0533 (0.0533) 1.00 5.40
1997-FST Admin-
istration
shares.......... 1.00 0.0512 0.0001 0.0513 (0.0513) 1.00 5.24
1997-FST Service
shares.......... 1.00 0.0487 0.0001 0.0488 (0.0488) 1.00 4.98
1996-FST
shares.......... 1.00 0.0522 0.0003 0.0525 (0.0524) 1.00 5.35
1996-FST Pre-
ferred
shares (c)...... 1.00 0.0342 0.0001 0.0343 (0.0343) 1.00 5.24(b)
1996-FST Admin-
istration shares
................ 1.00 0.0497 0.0002 0.0499 (0.0498) 1.00 5.09
1996-FST Service
shares ......... 1.00 0.0472 0.0002 0.0474 (0.0474) 1.00 4.83
1995-FST shares
................ 1.00 0.0573 0.0005 0.0578 (0.0578) 1.00 5.96
1995-FST Admin-
istration shares
................ 1.00 0.0547 0.0005 0.0552 (0.0552) 1.00 5.69
1995-FST Service
shares ......... 1.00 0.0521 0.0005 0.0526 (0.0526) 1.00 5.43
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares (d)...... 1.00 0.0379 (0.0001) 0.0378 (0.0378) 1.00 4.23(b)
1994-FST Admin-
istration
shares (d)...... 1.00 0.0388 (0.0001) 0.0387 (0.0387) 1.00 3.97(b)
1994-FST Service
shares (d)...... 1.00 0.0349 (0.0001) 0.0348 (0.0348) 1.00 3.71(b)
FOR THE YEARS ENDED JANUARY 31,
- -------------------------------
1994-FST
shares.......... 1.00 0.0301 0.0007 0.0308 (0.0307) 1.00 3.11
1994-FST Admin-
istration shares
................ 1.00 0.0276 0.0006 0.0282 (0.0281) 1.00 2.85
1994-FST Service
shares ......... 1.00 0.0251 0.0008 0.0259 (0.0256) 1.00 2.60
1993-FST shares
................ 1.00 0.0342 0.0012 0.0354 (0.0355) 1.00 3.69
1993-FST Admin-
istration
shares (e)...... 1.00 0.0009 -- 0.0009 (0.0009) 1.00 2.83(b)
1993-FST Service
shares ......... 1.00 0.0296 0.0016 0.0312 (0.0309) 1.00 3.17
1992-FST shares
................ 1.00 0.0549 0.0015 0.0564 (0.0561) 1.00 5.84
1992-FST Service
shares (e)...... 1.00 0.0113 0.0006 0.0119 (0.0116) 1.00 4.47(b)
FOR THE PERIOD MARCH 5, 1990(F) THROUGH JANUARY 31,
- ---------------------------------------------------
1991-FST
shares.......... 1.00 0.0600 0.0006 0.0606 (0.0605) 1.00 8.06(b)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
------------------------
RATIO OF NET NET RATIO OF NET
RATIO OF NET INVESTMENT ASSETS AT RATIO OF INVESTMENT
EXPENSES TO INCOME TO END EXPENSES TO INCOME TO
AVERAGE NET AVERAGE NET OF PERIOD AVERAGE NET AVERAGE NET
ASSETS ASSETS (IN 000'S) ASSETS ASSETS
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1997-FST
shares.......... 0.18% 5.36% $2,217,943 0.23% 5.31%
1997-FST Pre-
ferred shares... 0.28 5.32 245,355 0.33 5.27
1997-FST Admin-
istration
shares.......... 0.43 5.12 738,865 0.48 5.07
1997-FST Service
shares.......... 0.68 4.87 312,991 0.73 4.82
1996-FST
shares.......... 0.18 5.22 2,291,051 0.24 5.16
1996-FST Pre-
ferred
shares (c)...... 0.28(b) 5.11(b) 46,637 0.34(b) 5.05(b)
1996-FST Admin-
istration shares
................ 0.43 4.97 536,895 0.49 4.91
1996-FST Service
shares ......... 0.68 4.72 220,560 0.74 4.66
1995-FST shares
................ 0.18 5.73 1,587,715 0.23 5.68
1995-FST Admin-
istration shares
................ 0.43 5.47 283,186 0.48 5.42
1995-FST Service
shares ......... 0.68 5.21 139,117 0.73 5.16
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares (d)...... 0.18(b) 4.13(b) 958,196 0.25(b) 4.06(b)
1994-FST Admin-
istration
shares (d)...... 0.43(b) 4.24(b) 82,124 0.50(b) 4.17(b)
1994-FST Service
shares (d)...... 0.68(b) 3.82(b) 81,162 0.75(b) 3.75(b)
FOR THE YEARS ENDED JANUARY 31,
- -------------------------------
1994-FST
shares.......... 0.17 3.01 812,420 0.24 2.94
1994-FST Admin-
istration shares
................ 0.42 2.76 24,485 0.49 2.69
1994-FST Service
shares ......... 0.67 2.51 35,656 0.74 2.44
1993-FST shares
................ 0.18 3.42 776,181 0.26 3.34
1993-FST Admin-
istration
shares (e)...... 0.43(b) 2.83(b) 1 0.51(b) 2.75(b)
1993-FST Service
shares ......... 0.68 2.96 5,155 0.76 2.88
1992-FST shares
................ 0.18 5.49 413,171 0.28 5.39
1992-FST Service
shares (e)...... 0.68(b) 3.77(b) 3,634 0.78 3.67(b)
FOR THE PERIOD MARCH 5, 1990(F) THROUGH JANUARY 31,
- ---------------------------------------------------
1991-FST
shares.......... 0.21(b) 7.74(b) 229,988 0.34(b) 7.61(b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period.
(b) Annualized.
(c) FST Preferred share activity commenced May 1, 1996.
(d) The information presented reflects eleven months of operations due to a
change in fiscal year end. This change was caused by the reorganization of
the funds as a series of Goldman Sachs Money Market Trust.
(e) FST Administration and PST Service share activity commenced during January
of 1993 and October of 1991, respectively.
(f) Commencement of operations.
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Share Outstanding Throughout Each Period
Treasury Instruments Fund
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
---------------------------------
NET ASSET NET REALIZED TOTAL NET ASSET
VALUE AT NET GAIN INCOME FROM DISTRIBUTIONS VALUE AT
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT TO END TOTAL
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS OF PERIOD RETURN(A)
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
- -------------------------------
1997-FST
shares (c)...... $1.00 $0.0423 $0.0004 $0.0427 ($0.0427) $1.00 5.25%(b)
1997-FST Pre-
ferred
shares (c)...... 1.00 0.0296 -- 0.0296 (0.0296) 1.00 5.13 (b)
1997-FST Admin-
istration
shares (c)...... 1.00 0.0364 0.0003 0.0367 (0.0367) 1.00 4.99 (b)
1997-FST Service
shares (c)...... 1.00 0.0380 0.0003 0.0383 (0.0383) 1.00 4.71 (b)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
-------------------------
NET
RATIO OF NET ASSETS AT RATIO OF NET
RATIO OF NET INVESTMENT END RATIO OF INVESTMENT
EXPENSES TO INCOME TO OF PERIOD EXPENSES TO INCOME TO
AVERAGE NET AVERAGE NET (IN AVERAGE NET AVERAGE NET
ASSETS ASSETS 000'S) ASSETS ASSETS
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
- -------------------------------
1997-FST
shares (c)...... 0.18%(b) 5.09%(b) $496,419 0.29%(b) 4.98%(b)
1997-FST Pre-
ferred
shares (c)...... 0.28(b) 5.00(b) 2 0.39(b) 4.89(b)
1997-FST Admin-
istration
shares (c)...... 0.43(b) 4.84(b) 4,159 0.54(b) 4.73(b)
1997-FST Service
shares (c)...... 0.68(b) 4.62(b) 20,177 0.79(b) 4.51(b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period.
(b) Annualized.
(c) FST Share, FST Preferred Share, FST Administration Share, and FST Service
Share activity commenced March 3, 1997, May 30, 1997, April 1, 1997, and
March 5, 1997, respectively.
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Share Outstanding Throughout Each Period
Government Fund
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------
NET ASSET NET REALIZED TOTAL NET ASSET
VALUE AT NET GAIN INCOME FROM DISTRIBUTIONS VALUE AT
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT TO END TOTAL
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS OF PERIOD RETURN(A)
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1997-FST
shares.......... $1.00 $0.0541 $ -- $0.0541 $(0.0541) $1.00 5.54%
1997-FST Pre-
ferred shares... 1.00 0.0534 -- 0.0534 (0.0534) 1.00 5.43
1997-FST Admin-
istration
shares.......... 1.00 0.0515 -- 0.0515 (0.0515) 1.00 5.28
1997-FST Service
shares.......... 1.00 0.0491 -- 0.0491 (0.0491) 1.00 5.02
1996-FST
shares.......... 1.00 0.0525 0.0001 0.0526 (0.0526) 1.00 5.38
1996-FST Pre-
ferred
shares (c)...... 1.00 0.0344 0.0001 0.0345 (0.0345) 1.00 5.26(b)
1996-FST Admin-
istration
shares.......... 1.00 0.0501 0.0001 0.0502 (0.0502) 1.00 5.12
1996-FST Service
shares.......... 1.00 0.0474 0.0001 0.0475 (0.0475) 1.00 4.86
1995-FST
shares.......... 1.00 0.0581 0.0001 0.0582 (0.0582) 1.00 6.00
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares (d)...... 1.00 0.0424 -- 0.0424 (0.0424) 1.00 4.36(b)
1994-FST Admin-
istration
shares (d)...... 1.00 0.0426 -- 0.0426 (0.0426) 1.00 4.10(b)
FOR THE PERIOD ENDED JANUARY 31,
- --------------------------------
1994-FST
shares (c)...... 1.00 0.0256 0.0001 0.0257 (0.0257) 1.00 3.14(b)
1994-FST Admin-
istration
shares (c)...... 1.00 0.0120 0.0001 0.0121 (0.0121) 1.00 2.87(b)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
------------------------
RATIO OF NET NET RATIO OF NET
RATIO OF NET INVESTMENT ASSETS AT RATIO OF INVESTMENT
EXPENSES TO INCOME TO END EXPENSES TO INCOME TO
AVERAGE NET AVERAGE NET OF PERIOD AVERAGE NET AVERAGE NET
ASSETS ASSETS (IN 000'S) ASSETS ASSETS
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1997-FST
shares.......... 0.18% 5.41% $1,478,539 0.24% 5.35%
1997-FST Pre-
ferred shares... 0.28 5.34 7,147 0.34 5.28
1997-FST Admin-
istration
shares.......... 0.43 5.15 299,804 0.49 5.09
1997-FST Service
shares.......... 0.68 4.91 580,200 0.74 4.85
1996-FST
shares.......... 0.18 5.25 858,769 0.24 5.19
1996-FST Pre-
ferred
shares (c)...... 0.28(b) 5.14(b) 112 0.34(b) 5.08(b)
1996-FST Admin-
istration
shares.......... 0.43 5.01 145,108 0.49 4.95
1996-FST Service
shares.......... 0.68 4.74 223,554 0.74 4.68
1995-FST
shares.......... 0.18 5.81 743,884 0.24 5.75
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares (d)...... 0.15(b) 4.64(b) 258,350 0.25(b) 4.54(b)
1994-FST Admin-
istration
shares (d)...... 0.40(b) 4.67(b) 54,253 0.50(b) 4.57(b)
FOR THE PERIOD ENDED JANUARY 31,
- --------------------------------
1994-FST
shares (c)...... 0.08(b) 3.10(b) 44,697 0.59(b) 2.59(b)
1994-FST Admin-
istration
shares (c)...... 0.35(b) 2.85(b) 14,126 0.76(b) 2.44(b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and complete redemption of the
investment at the net asset value at the end of the period.
(b) Annualized.
(c) FST share, FST Administration share, FST Service share and FST Preferred
share activity commenced April 6, 1993, September 1, 1993, May 16, 1995
and May 1, 1996, respectively.
(d) The information presented reflects eleven months of operations due to a
change in fiscal year end. This change was caused by the reorganization of
the funds as a series of Goldman Sachs Money Market Trust.
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Share Outstanding Throughout Each Period
Federal Fund
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
-----------------------------------
NET ASSET NET REALIZED TOTAL NET ASSET
VALUE AT NET GAIN ON INCOME FROM DISTRIBUTIONS VALUE AT
BEGINNING INVESTMENT INVESTMENT INVESTMENT TO END TOTAL
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS OF PERIOD RETURN(A)
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
- -------------------------------
1997-FST
shares(c)....... $1.00 $0.0454 $ -- $0.0454 $(0.0454) $1.00 5.51%(b)
1997-FST Pre-
ferred
shares(c)....... 1.00 0.0311 -- 0.0311 (0.0311) 1.00 5.43(b)
1997-FST
Administration
shares(c)....... 1.00 0.0388 -- 0.0388 (0.0388) 1.00 5.27(b)
1997-FST Service
shares(c)....... 1.00 0.0379 -- 0.0379 (0.0379) 1.00 5.00(b)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
-------------------------
RATIO OF NET NET RATIO OF NET
RATIO OF NET INVESTMENT ASSETS AT RATIO OF INVESTMENT
EXPENSES TO INCOME TO END EXPENSES TO INCOME TO
AVERAGE NET AVERAGE NET OF PERIOD AVERAGE NET AVERAGE NET
ASSETS ASSETS (IN 000'S) ASSETS ASSETS
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
- -------------------------------
1997-FST
shares(c)....... 0.18%(b) 5.39%(b) $1,125,681 0.27%(b) 5.30%(b)
1997-FST Pre-
ferred
shares(c)....... 0.28(b) 5.26(b) 194,375 0.37(b) 5.17(b)
1997-FST
Administration
shares(c)....... 0.43(b) 5.15(b) 625,334 0.52(b) 5.06(b)
1997-FST Service
shares(c)....... 0.68(b) 4.78(b) 228,447 0.77(b) 4.69(b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period.
(b) Annualized.
(c) FST share, FST Preferred share, FST Administration share, and FST Service
share activity commenced February 28, 1997, May 30, 1997, April 1, 1997
and March 25, 1997, respectively.
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
Goldman Sachs Trust--Financial Square Funds
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Share Outstanding Throughout Each Period
Tax-Free Money Market Fund
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------
NET ASSET NET REALIZED TOTAL NET ASSET
VALUE AT NET GAIN INCOME FROM DISTRIBUTIONS VALUE AT
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT TO END TOTAL
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS OF PERIOD RETURN(A)
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1997-FST
shares.......... $1.00 $0.0350 $ -- $0.0350 $(0.0350) $1.00 3.54%
1997-FST Pre-
ferred shares... 1.00 0.0339 -- 0.0339 (0.0339) 1.00 3.43
1997-FST Admin-
istration
shares.......... 1.00 0.0327 -- 0.0327 (0.0327) 1.00 3.28
1997-FST Service
shares.......... 1.00 0.0301 -- 0.0301 (0.0301) 1.00 3.02
1996-FST
shares.......... 1.00 0.0335 -- 0.0335 (0.0335) 1.00 3.39
1996-FST Pre-
ferred shares... 1.00 0.0218 -- 0.0218 (0.0218) 1.00 3.30(b)
1996-FST Admin-
istration
shares (c)...... 1.00 0.0310 -- 0.0310 (0.0310) 1.00 3.13
1996-FST Service
shares.......... 1.00 0.0285 -- 0.0285 (0.0285) 1.00 2.88
1995-FST
shares.......... 1.00 0.0381 -- 0.0381 (0.0381) 1.00 3.89
1995-FST Admin-
istration
shares.......... 1.00 0.0354 -- 0.0354 (0.0354) 1.00 3.63
1995-FST Service
shares.......... 1.00 0.0332 -- 0.0332 (0.0332) 1.00 3.38
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares (c)...... 1.00 0.0156 -- 0.0156 (0.0156) 1.00 3.41(b)
1994-FST Admin-
istration
shares (c)...... 1.00 0.0136 -- 0.0136 (0.0136) 1.00 3.19(b)
1994-FST Service
shares (c)...... 1.00 0.0091 -- 0.0091 (0.0091) 1.00 3.11(b)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
------------------------
NET
RATIO OF NET ASSETS AT RATIO OF NET
RATIO OF NET INVESTMENT END RATIO OF INVESTMENT
EXPENSES TO INCOME TO OF PERIOD EXPENSES TO INCOME TO
AVERAGE NET AVERAGE NET (IN AVERAGE NET AVERAGE NET
ASSETS ASSETS 000'S) ASSETS ASSETS
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1997-FST
shares.......... 0.18% 3.50% $939,407 0.24% 3.44%
1997-FST Pre-
ferred shares... 0.28 3.39 35,152 0.34 3.33
1997-FST Admin-
istration
shares.......... 0.43 3.27 103,049 0.49 3.21
1997-FST Service
shares.......... 0.68 3.01 42,578 0.74 2.95
1996-FST
shares.......... 0.18 3.35 440,838 0.23 3.30
1996-FST Pre-
ferred shares... 0.28(b) 3.26(b) 28,731 0.33(b) 3.21(b)
1996-FST Admin-
istration
shares (c)...... 0.43 3.10 51,661 0.48 3.05
1996-FST Service
shares.......... 0.68 2.85 19,855 0.73 2.80
1995-FST
shares.......... 0.14 3.81 448,367 0.24 3.71
1995-FST Admin-
istration
shares.......... 0.39 3.54 20,939 0.49 3.44
1995-FST Service
shares.......... 0.64 3.32 19,860 0.74 3.22
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares (c)...... 0.07(b) 3.42(b) 183,570 0.31(b) 3.18(b)
1994-FST Admin-
istration
shares (c)...... 0.32(b) 3.25(b) 2,042 0.56(b) 3.01(b)
1994-FST Service
shares (c)...... 0.57(b) 3.32(b) 2,267 0.81(b) 3.08(b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period.
(b) Annualized.
(c) FST share, FST Administration share, FST Service share and FST Preferred
share activity commenced July 19, 1994, August 1, 1994, September 23, 1994
and May 1, 1996, respectively.
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------- ---------------------------------------
To the Shareholders and Board of Trustees of the Goldman Sachs Trust--Financial
Square Funds:
We have audited the accompanying statements of assets and liabilities of the
Goldman Sachs Trust--Financial Square Funds (a Delaware business trust
comprising the Prime Obligations, Money Market, Premium Money Market, Treasury
Obligations, Treasury Instruments, Government, Federal and Tax-Free Money
Market Funds), including the statements of investments as of December 31, 1997,
and the related statements of operations, and the statements of changes in net
assets and the financial highlights for each of the periods presented. These
financial statements and the financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective Funds constituting Goldman Sachs Trust--Financial Square
Funds as of December 31, 1997, the results of their operations and the changes
in their net assets and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
February 12, 1998
---------------------------------------
- ---------------------------------------
43
<PAGE>
VOTING RESULTS OF SPECIAL MEETING OF SHAREHOLDERS
The proposals described below were submitted to a vote of shareholders of
Financial Square Funds (the "Trust") at a Special Meeting of Shareholders held
on April 1, 1997 and reconvened on April 24, 1997 (the "Meeting"):
- --------------------------------------------------------------------------------
PROPOSAL NO. 1--ELECTION OF TRUSTEES:
- --------------------------------------------------------------------------------
At the Meeting, Ashok Bakhru, David B. Ford, Douglas Grip, John McNulty, Mary
McPherson, Richard Strubel, Alan Shuch, Jackson Smart and William Springer were
elected to the Trust's Board of Trustees. In electing directors, the Trust's
shareholders voted as follows:/1/
<TABLE>
<CAPTION>
DIRECTOR FOR AGAINST ABSTAIN BROKER NON-VOTES
-------- ------------------ ------- --------------- ----------------
<S> <C> <C> <C> <C>
Ashok Bakhru............ 13,198,134,650.489 0 317,290,085.560 0
David B. Ford........... 13,196,882,310.419 0 318,542,425.630 0
Douglas Grip............ 13,198,421,139.119 0 317,003,596.930 0
John McNulty............ 13,192,672,508.499 0 322,752,227.550 0
Mary McPherson.......... 13,198,375,102.859 0 317,049,638.190 0
Richard Strubel......... 13,198,269,677.579 0 317,155,058.470 0
Alan Shuch.............. 13,196,888,161.369 0 318,536,574.680 0
Jackson Smart........... 13,186,250,475.539 0 329,174,260.510 0
William Springer........ 13,186,378,105.759 0 329,046,630.290 0
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 2--RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP AS THE
TRUST"S INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1997:
- --------------------------------------------------------------------------------
At the Meeting, the Trust's shareholders approved Proposal No. 2 as
follows:/1/
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN BROKER NON-VOTES
- ------------------ -------------- --------------- ----------------
<S> <C> <C> <C>
12,740,448,568.959 86,008,900.390 688,967,266.700 0
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 4(B)--APPROVAL OF AN AMENDMENT TO THE TRUST'S DECLARATION OF TRUST
TO PERMIT INVESTMENT OF EACH FUND'S ASSETS IN ANOTHER OPEN-END
INVESTMENT COMPANY:
- --------------------------------------------------------------------------------
At the Meeting, the Trust's shareholders approved Proposal No. 4(B) as
follows:/1/
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN BROKER NON-VOTES
- ------------------ --------------- --------------- ----------------
<S> <C> <C> <C>
11,979,828,027.249 666,114,085.840 869,482,622.960 0
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 3--APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each of the Trust's portfolios (each, a
"Fund" and collectively, the "Funds") approved Proposal No. 3 as follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- ------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 2,750,763,971.82 19,674,207.77 19,428,103.21 0
FST--Government......... 614,737,552.22 49,958,078.95 212,013,615.15 0
FST--Treasury Obliga-
tions.................. 1,643,159,064.65 3,422,314.12 23,291,123.97 0
FST--Money Market....... 1,768,028,087.81 551,572.88 237,836,598.85 0
FST--Tax-Free........... 321,403,549.04 2,303,384.98 73,216.10 0
</TABLE>
44
<PAGE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 4(A)--APPROVAL OF AN AMENDMENT TO THE FUND'S INVESTMENT
RESTRICTIONS TO PERMIT EACH FUND TO INVEST ALL OF ITS ASSETS IN
ANOTHER OPEN-END INVESTMENT COMPANY:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each Fund approved Proposal No. 4(A) as
follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 2,632,813,935.56 137,676,305.03 19,376,042.21 0
FST--Government......... 600,507,908.99 50,171,200.71 226,030,136.62 0
FST--Treasury Obliga-
tions.................. 1,534,118,627.46 112,516,646.34 23,237,228.94 0
FST--Money Market....... 1,622,692,959.96 119,723,518.11 263,999,781.47 0
FST--Tax-Free........... 321,385,838.42 2,341,263.05 53,048.65 0
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 5(A)--INVESTMENT POLICY ON ISSUER DIVERSIFICATION:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each Fund approved Proposal No. 5(A) as
follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 2,025,173,322.36 741,685,870.02 23,007,090.42 0
FST--Government......... 492,127,188.66 94,058,605.71 290,523,451.95 0
FST--Treasury Obliga-
tions.................. 1,590,614,773.93 3,298,162.45 75,959,566.36 0
FST--Money Market....... 1,641,176,450.29 93,217,845.13 272,021,964.12 0
FST--Tax-Free........... 319,424,168.46 2,303,384.98 2,052,596.68 0
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 5(B)--INVESTMENT POLICY ON INDUSTRY CONCENTRATION:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each Fund approved Proposal No. 5(B) as
follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 2,113,864,890.90 655,676,834.86 20,324,557.04 0
FST--Government......... 536,127,188.66 50,058,605.71 290,523,451.95 0
FST--Treasury Obliga-
tions.................. 1,584,005,181.34 10,354,359.55 75,512,961.85 0
FST--Money Market....... 1,727,011,799.59 7,162,833.03 272,241,626.92 0
FST--Tax-Free........... 319,424,168.46 2,303,384.98 2,052,596.68 0
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 5(C)--INVESTMENT POLICIES ON BORROWING, MARGIN PURCHASES AND
PLEDGING ASSETS:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each Fund approved Proposal No. 5(C) as
follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 2,032,851,854.68 735,012,001.25 22,002,426.87 0
FST--Government......... 536,014,593.26 50,171,201.11 290,523,451.95 0
FST--Treasury Obliga-
tions.................. 1,472,597,369.41 121,761,319.48 75,513,813.85 0
FST--Money Market....... 1,597,694,673.27 116,718,197.61 292,003,388.66 0
FST--Tax-Free........... 320,117,743.24 2,515,405.70 1,147,001.18 0
</TABLE>
45
<PAGE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 5(D)--INVESTMENT POLICY ON LOANS:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each Fund approved Proposal No. 5(D) as
follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 2,137,654,263.39 631,935,174.22 20,276,845.19 0
FST--Government......... 536,127,188.66 50,058,605.71 290,523,451.95 0
FST--Treasury Obliga-
tions.................. 1,563,411,594.51 10,339,372.94 96,121,535.29 0
FST--Money Market....... 1,647,121,629.22 86,498,763.32 272,795,867.00 0
FST--Tax-Free........... 321,423,716.49 2,303,384.98 53,048.65 0
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 5(E)--INVESTMENT POLICY ON UNDERWRITING:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each Fund approved Proposal No. 5(E) as
follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 2,107,675,459.08 604,973,342.98 77,217,480.74 0
FST--Government......... 536,127,188.66 50,058,605.71 290,523,451.95 0
FST--Treasury Obliga-
tions.................. 1,563,423,400.52 10,339,372.93 96,109,729.29 0
FST--Money Market....... 1,647,222,596.46 86,498,763.32 272,694,899.76 0
FST--Tax-Free........... 321,423,716.49 2,303,384.98 53,048.65 0
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 5(F)--INVESTMENT POLICY ON REAL ESTATE AND OIL AND GAS:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each Fund approved Proposal 5(F) as
follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 1,864,040,389.62 866,974,034.38 58,851,858.80 0
FST--Government......... 498,311,661.41 87,874,132.96 290,523,451.95 0
FST--Treasury Obliga-
tions.................. 1,543,861,427.62 29,902,197.83 96,108,877.29 0
FST--Money Market....... 1,502,832,684.48 162,262,211.64 341,321,363.42 0
FST--Tax-Free........... 320,329,763.96 2,303,384.98 1,147,001.18 0
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 5(G)--INVESTMENT POLICY ON COMMODITIES:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each Fund approved Proposal No. 5(G) as
follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 1,955,328,415.10 783,843,073.32 50,694,794.38 0
FST--Government......... 536,127,188.66 50,061,283.54 290,520,774.12 0
FST--Treasury Obliga-
tions.................. 1,462,302,194.33 111,554,993.46 96,015,314.95 0
FST--Money Market....... 1,592,467,171.50 141,153,221.04 272,795,867.00 0
FST--Tax-Free........... 315,235,397.48 6,492,155.96 2,052,596.68 0
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 5(H)--INVESTMENT POLICY ON SENIOR SECURITIES:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each Fund approved Proposal No. 5(H) as
follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 2,006,584,642.16 735,239,141.88 48,042,498.76 0
FST--Government......... 536,017,271.49 50,171,200.71 290,520,774.12 0
FST--Treasury Obliga-
tions.................. 1,557,058,699.27 16,150,312.24 96,663,491.23 0
FST--Money Market....... 1,598,123,371.27 116,417,284.77 291,875,603.50 0
FST--Tax-Free........... 320,329,763.96 2,303,384.98 1,147,001.18 0
</TABLE>
46
<PAGE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 5(I)--INVESTMENT RESTRICTION CONCERNING SHORT SALES OF SECURITIES:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each Fund approved Proposal No. 5(I) as
follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 1,881,193,604.90 848,795,361.47 59,877,316.43 0
FST--Government......... 535,990,656.40 50,171,201.11 290,547,388.81 0
FST--Treasury Obliga-
tions.................. 1,458,090,940.53 115,131,990.67 96,649,571.54 0
FST--Money Market....... 1,570,114,107.56 94,298,763.32 342,003,388.66 0
FST--Tax-Free........... 316,140,992.98 6,492,155.96 1,147,001.18 0
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 5(J)--INVESTMENT POLICY ON OPTIONS:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each Fund approved Proposal No. 5(J) as
follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 1,946,413,177.34 783,795,361.47 59,657,743.99 0
FST--Government......... 536,103,251.80 50,061,283.54 290,544,710.98 0
FST--Treasury Obliga-
tions.................. 1,462,545,194.90 111,204,686.55 96,122,621.29 0
FST--Money Market....... 1,531,855,599.49 132,658,238.63 341,902,421.42 0
FST--Tax-Free........... 315,235,397.48 6,492,155.96 2,052,596.68 0
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 5(K)--INVESTMENTS TO EXERCISE CONTROL:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each Fund approved Proposal No. 5(K) as
follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 1,958,631,006.28 774,813,086.37 56,422,190.15 0
FST--Government......... 535,990,656.80 50,171,200.71 290,547,388.81 0
FST--Treasury Obliga-
tions.................. 1,476,366,263.54 117,965,355.72 75,540,884.48 0
FST--Money Market....... 1,676,388,608.83 124,858,238.63 205,169,412.08 0
FST--Tax-Free........... 321,423,716.49 2,303,384.98 53,048.65 0
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL NO. 6--APPROVAL OF AMENDED AND RESTATED MANAGEMENT AGREEMENTS:
- --------------------------------------------------------------------------------
At the Meeting, the shareholders of each Fund approved Proposal No. 6 as
follows:
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN BROKER NON-VOTES
---- ---------------- ------------- -------------- ----------------
<S> <C> <C> <C> <C>
FST--Prime Obligations.. 2,514,108,328.97 39,546,154.00 236,211,799.83 0
FST--Government......... 600,653,684.02 50,058,605.71 225,996,956.59 0
FST--Treasury Obliga-
tions.................. 1,590,952,308.54 3,061,857.61 75,858,337.59 0
FST--Money Market....... 1,816,523,365.52 474,748.46 189,418,145.56 0
FST--Tax-Free........... 319,424,168.46 2,303,384.98 2,052,596.68 0
</TABLE>
/1/The voting results for proposal nos. 1, 2 and 4(B) reflect the vote of the
shareholders of the Trust and the shareholders of Goldman Sachs Financial
Square Funds.
47
<PAGE>
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48
<PAGE>
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This Annual Report is authorized for distribution to prospective investors only
when preceded or accompanied by a Goldman Sachs Trust Financial Square Funds
Prospectus which contains facts concerning each Fund's objectives and policies,
management, expenses and other information.
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49
<PAGE>
TRUSTEES
Ashok N. Bakhru, Chairman
David B. Ford
Douglas C. Grip
John P. McNulty
Mary P. McPherson
Alan. A. Shuch
Jackson W. Smart, Jr.
William H. Springer
Richard P. Strubel
OFFICERS
Douglas C. Grip, President
James A. Fitzpatrick, Vice President
John W. Mosior, Vice President
Nancy L. Mucker, Vice President
Scott M. Gilman, Treasurer
John M. Perlowski, Assistant Treasurer
Michael J. Richman, Secretary
Howard B. Surloff, Assistant Secretary
GOLDMAN SACHS
Investment Adviser,
Distributor and Transfer Agent
Goldman
Sachs
Goldman Sachs Funds
One New York Plaza, 41st Floor
New York, NY 10004
